Right to Buy: Five Questions to Consider Before Getting Started
Offering discounts of up to 70% of the official market value of homes across England, Right to Buy is helping thousands of council tenants get on the property ladder. The maximum discount currently available under the Right to Buy scheme is a huge £82,800 (or £110,500 in London).
One of the most appealing aspects of Right to Buy is the way in which this sizable discount can be used in place of the usual deposit. Most council tenants who qualify under Right to Buy are not required to save the usual 10%, 15% or 20% deposits to qualify for a mortgage. The average deposit requirement for a home in the UK currently standing at approximately £40,000 – far more than most tenants can realistically afford.
Right to Buy can therefore be a tempting proposition but must be considered carefully. Prior to getting started with a Right to Buy application, it’s advisable to ask yourself the following five questions to ensure you make the right decision:
- Have I Considered the Pros and Cons of Ownership?
The benefits of homeownership outweigh the drawbacks by a considerable margin. But this doesn’t mean there aren’t important disadvantages for homeownership to consider. Examples of which include responsibility for the property’s upkeep and maintenance, commitment to one location indefinitely and the possibility of the property’s price decreasing.
- Can I Commit to the Long-Term Repayments?
It’s important to remember that just because an individual can qualify under the Right to Buy doesn’t mean they can afford to buy their home. The opportunity to purchase a property at a considerable discount is one thing but it is something else entirely to pay the remaining balance over 20 or 30 years. Under no circumstances should a mortgage application be completed without careful consideration, even where Right to Buy discounts apply. It’s a good idea to use a right to buy mortgage calculator.
- How Strong Is My Credit Score?
You may want to seek additional advice and support if you do not have a particularly strong credit score. Subprime mortgages are available for poor-credit applicants though are not typically offered by major High Street banks. You will therefore need to direct your efforts at a specialist lender under the supervision of an independent broker. Subprime mortgages continue to represent a lifeline for thousands of home buyers across the UK.
- Do I Have Proof of Income?
You will be expected to provide valid proof of income as part of the application process. It is still possible to qualify for a Right to Buy mortgage if you are self-employed and/or encounter difficulties proofing your income. Speak to an independent broker if you have any concerns regarding evidence of your financial status.
- What Are My Long-Term Plans?
Lastly, you’ll also want to carefully consider your long-term plans. Buyers under the Right to Buy have the right to sell or let out their properties at any time but may have to return some or all of the discount. Right to Buy may therefore not be the ideal option if you are likely to relocate once again in the near future.
*This is a collaborative post.
