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Right To Buy Mortgages


Things To Know About Right To Buy Mortgages

There are Right to Buy mortgages open to people who have bad credit. The number of Right to Buy Mortgage Lenders that offer terms to applicants who havedefaults and CCJs or late or missed payments although they tend to prefer houses to flats and issues involving IVAs and bankruptcies  are often very serious and can lower your chances of getting a mortgage. Interestingly, if you have a discount from the local authority, Lenders will allow you to use the local authority discount in lieu of your own deposit. You will get a mortgage for the balance between your discount and the open market value.

Lender usually add an extra rule which prevents people from taking loan which exceeds the open market value by a certain percentage with 75% being the norm. There are other lenders who can go as high as 95%.

To illustrate, if the open market value of the property is £100,000 and the borrower had the opportunity of buying it for £70,000 which equates to 85 percent of the open market value. Lenders who only lend 75 percent would be ruled out unless a 10 percent deposit is put down.

An individual can borrow more than the Right to Buy discounted purchasebut the number of lenders who provide this feature is limited so the individual may need speak to Independent Mortgage Brokers. Any additional funds are usually limited to home improvements and sometimes legal fees are added. but the total mortgage is usually capped at 75% of the open market.

In case an individual intends to borrow above the discounted price, the local authority will have to grant permission for that. This process is usually referred to as an ‘unconditional postponement of their charge’.The maximum amount to be borrowed on a Right to Buy mortgage depends on certain factors such as: your occupation, current circumstances, age, income, the number of dependents the individual has and the personal credit commitments. In some instances, Benefit income can also be used as a secondary source of income to support the main job. Lenders can consider guarantors who are of good standing such as children standing for their parents who have a Right-to-Buy. They can also be considered provided their income covers their own personal commitments.

An individual who is an income earner can satisfy the income requirement on their behalf parents provided they live in the property and are also named on the Right-to-Buy papers. However, if you own a property that is different and also have a successful career, it may still be possible under ‘guarantor’ criteria. Your income would need to cover the mortgages although your Lender options are limited.

Individuals who are retired can still get a Right-to-Buy mortgage, however the Right to Buy Mortgage Lender will need to be comfortable with their retirement income as their regular and sustainable income such as a lifetime annuity and pension. Individuals who use State pension income alone are likely to be declined by the lenders. The maximum mortgage term for most lenders is usually to age 70 or 75.

Low mortgage rates for a Right to Buy mortgage

To obtain the best Right to Buy mortgage rates you should speak to Independent Mortgage Brokers (IMB) as we willhelp you research the full market and ensure you do not miss out on the lowest Right to Buy mortgage deals available. You will need to present some documents such as Right to Buy notice, private, company and state pension or annuity statements (if the individual is retired), 3 to 6 months’ payslips and last P60 (if you are employed), Details of the planned home improvements, the names given on the Right to Buy notice must also  be on the mortgage, 2 years’ accounts or self-assessment returns (if self-employed), Last 3 to 6 months’ bank statements showing that current rent has been paid and salary credit.

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Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of our Independent Mortgage Brokers to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisers working for or with Independent Mortgage Brokers are fully qualified to provide mortgage advice and authorised and regulated by the Financial Conduct Authority. All our independent Mortgage Brokers will offer advice specific to you and your needs and circumstances. Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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