Since 1980, the Right to Buy scheme has helped thousands of council tenants get on the property ladder. Today, discounts of up to £82,800 are available on qualifying council homes across England, increasing to £110,500 in London.
If considering a property purchase under the RTB scheme, use our helpful Right to Buy calculator for a basic overview of the costs. Right to Buy rates are typically no different to standard mortgage rates and have the same additional borrowing costs to factor in that apply to all types of mortgages.
Can I Afford to Purchase My Property Under Right to Buy?
One of the biggest benefits of purchasing a property under the Right to Buy scheme is the way in which the discount afforded on your property can often be used in place of a deposit. This means that rather than saving up a down payment, you can purchase your property with a smaller deposit or no down payment whatsoever.
This does not mean other one-off costs, fees and expenses do not apply. Even if you are offered a significant discount on the market value of your home, overall affordability may still be affected by the following:
- It is important to remember that like most mortgage rates, Right to Buy rates can increase or decrease after the introductory fixed rate period unless you have enrolled into a new deal. You therefore need to consider your capacity to continue repaying your loan, should your financial circumstances change in the future or you do not renew your mortgage product.
- Arrangement fees (sometimes referred to as setup or admin fees) apply with most lenders. This could be anything from 0.5% to 2% of the total value of the loan, payable upfront but on most occasions this fee is added to the loan.
- Legal representation may also be necessary as part of the application process, solicitors typically requiring some small upfront payment. You may also need to pay for a surveyor approved by your lender to conduct a formal valuation of your property. Often however free legal and valuation schemes are available.
- The monthly repayments on your mortgage could be higher than the monthly rent you are paying on your council property although in today’s low interest rate world, that is now rarely the case.
- Upon purchasing your home, you will take full responsibility for all maintenance, repairs and general upkeep, which may also include attending to exterior spaces or contributing to the upkeep of the building (in the case of an apartment).
- Broker fees sometimes apply, although in many cases you may get a better overall service if the broker used receives the fee only on successful completion. This fee may be added to the loan if required.
- Exit fees may also apply, for early repayment of the loan or if refinancing when still in the introductory period.
Independent broker support
The key to getting the best possible deal on a Right to Buy mortgage lies in seeking independent broker support at the earliest possible stage. This will enable you to access the broadest possible options from specialist lenders across the UK, while at the same time ensuring you fully understand all associated costs and fees.
Call or e-mail anytime to arrange an obligation-free consultation with one of our experts, if interested in a Right to Buy property purchase.
