How much you can borrow on a Right to Buy mortgage
The amount of lending available depends on the market value of your home, how long you have been a tenant, how much of a deposit you can put down, and other assessment criteria such as affordability. If you are unsure of whether you would be able to apply, or whether you meet the criteria for a Right to Buy mortgage, get in touch with Revolution Finance Brokers and we will be delighted to help you understand the process, and what your best options are.
Key criteria for the Right to Buy scheme
The scheme carries eligibility criteria around the applicant and the property in question:
- The applicant must not have any debt problems or be being legally pursued for debt repayments
- The applicant must not have any outstanding possession orders in place
- The property must be the applicant's main residence or their only home
- The property must not be specialist housing designed for elderly or disabled tenants
- The property cannot be on a demolition schedule
Affordability of the Right to Buy scheme
Being able to demonstrate affordability and that you can keep up with your mortgage repayments is essential before considering any mortgage application. Every lender will carry out affordability assessments before they can make any mortgage offer. Depending on your home and other circumstances, there will be discounts and subsidies available so it is important to understand what you can afford, and how much your repayments are likely to be. You can access mortgage calculators to estimate the required repayments, or give the team at Revolution Finance Brokers a call and we will be happy to walk through the process with you. Usually, your monthly outgoings will remain consistent with your existing rent. However, there are other costs to consider including property insurance, arrangement fees and survey fees. Making sure you know about all the cost implications is essential before taking out a Right to Buy mortgage.
Applying for a Right to Buy mortgage
Once you have considered the eligibility criteria and are confident that you can afford to keep up with repayments, the first step in securing a Right to Buy mortgage is in completing the RTB1 form, which is the Right to Buy scheme application form. This can be completed online, or a paper copy can be obtained from your landlord or housing association. You can apply as an individual if you are the only tenant, or can make a joint application including up to three family members provided you have lived together at the property address for at least 12 months. The application process usually takes between 4-8 weeks, and if your application is rejected you will be advised why. If your application is approved, you will receive a mortgage offer.
Receiving a Right to Buy mortgage offer
Once a Right to Buy application is approved, the landlord will issue an offer notice called an S125. This form usually takes around 8 weeks to be issued for a freehold property, or around 12 weeks for a leasehold property. Your S125 will explain how much the property has been valued at, and what subsidy you will receive against this valuation. Any structural issues identified during the valuation process will also be explained, along with any terms that apply to the offer.
How much of a discount does the Right to Buy scheme offer?
The discount you will receive depends on the type of property in question, and how long you have been a tenant for. For houses, the basic discount currently stands at 35%, for tenants who have been in residence for up to 5 years. This is extended by 1% for every additional year you have been a tenant, to a maximum of 70% or £82,800. This cap is extended to £110,500 in London. For flats, the basic discount currently stands at 50%, for tenants who have been in residence for up to 5 years. This is extended by 2% for every additional year you have been a tenant, to a maximum of 70% or £82,800. This cap is also extended to £110,500 in London.
What to do if your Right to Buy application is rejected
If your landlord rejects your application or does not respond within the deadlines, you have the right of appeal. This also applies if you disagree with the property valuation.
Right to Buy mortgages for retired applicants
If you are retired and a tenant of social housing or council housing, then you have the option of applying for a Right to Buy mortgage. The main criteria are affordability rather than age, so if you can demonstrate that you can afford to keep up with the mortgage repayments, there is no reason that you could not apply to access the Right to Buy scheme. Should you need any help understanding whether you can apply, or what the process is, give our expert team a call and we will work with you to help make sure your Right to Buy application is successful.
Right to Buy mortgages for self-employed people
Being self-employed can make it more difficult to demonstrate affordability, and thus your ability to keep up with repayments. However, if you have regular income and are confident that you can afford the mortgage repayments, you are as eligible to apply to the Right to Buy scheme as any employed person. The essential factor is to be able to show your regular income will cover the mortgage repayments, and fit in with the lending criteria received as part of a mortgage offer. Right to Buy is a scheme intended to make it possible for housing tenants to purchase their home, at a discounted cost and an affordable rate. Revolution Finance Brokers are proud to have a long history of successfully helping applicants navigate the Right to Buy scheme, understand their options, complete the application process, and achieve their aspiration of owning their own home. If you need any advice or support with the process, give us a call at 0330 304 3040 or drop us an email at info@revolutionbrokers.co.uk today.
FAQs
How can I apply for Right to Buy?
You apply directly through your landlord, who will in return send you your offer. If you are unsure whether you are eligible, need some help understanding the application process or have any questions about the Right to Buy scheme, give us a call and we will be happy to help you through the process!
What does the landlord’s offer include in Right to Buy?
Your offer will explain the current market value of your property, and how this has been calculated. The available discount will be explained, and the details setting out the property, any boundaries and any land included within the sale. Your offer also sets out the service charges payable for the first five years to help you understand the costs.
Can I apply for Right to Buy with somebody else?
Yes, you can apply with your partner and if you are living together this might be the most suitable option! Some lenders will require that both applicants to the Right to Buy scheme are the same applicants as named on the mortgage paperwork, but this is not always mandatory.
Am I eligible for Right to Buy as a retired person?
Yes, you are! If you are retired and would like to purchase your home, you have every right to apply to the scheme. The only difference will be demonstrating your income stream, and considering the right lenders who are happy to offer mortgage terms to a retired person. Sometimes the best rates and terms for retirees are available through more specialist lenders so if you have been turned down, or are concerned about being able to find the right mortgage scheme for you, give our mortgage team a call and we will find the solution that best suits your circumstances.
Can self-employed people apply for Right to Buy?
Self-employed people have the same option to apply for Right to Buy as an employed person. The main difference in securing mortgage lending for a self-employed person is being able to demonstrate affordability. Typically this is through copies of your accounts, or records from HMRC to demonstrate your self-employed income.
