In This Article
What is a right to buy mortgage?
A right to buy property is a scheme provided by the government where the council or housing association agree to sell you the property that you live in for an agreed discount. For example, depending on how long you have been living in the property you may qualify for a discount of up to approximately 60 to 70% of the property value and need a mortgage to pay for the remaining equity for sale.
If a property were worth £200,000 and housing association agreed to sell it to you at a 50% discount, assuming you had no funds to put down yourself towards the deposit, you would need a mortgage of £100,000 on a right to buy basis to be able to complete the transaction. Not all lenders agreed to lend on right to buy properties but there are plenty that will.
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Is taking advantage of right to buy a clever idea?
If you qualify for a right to buy property, it can be a great idea to take advantage of the offer and buy the property. The reason is you would be getting immediate equity that you would not be getting if you were buying a property in the conventional manner.
Due to not all lenders requiring cash deposits, buying a right to buy property with a mortgage may also mean that you were able to buy a place that you would not have got otherwise as you did not have the deposit funds available to put down on an ordinary purchase.
If you were offered the opportunity to buy a £200,000 property with a 50% discount, that would be an immediate equity sum of £100,000 that is now in your ownership.
How much can you borrow on a right to buy mortgage?
The amount that you can borrow on your right by mortgage move vary from lender to lender but there are some lenders that will consider lending 100% of discounted price. In this scenario, this would save you having to accumulate the cash deposit to go towards your purchase.
For example, if you were being offered a property for £125,000 that had a value of £250,000 (so a 50% discount), there are lenders that would be willing to consider lending the full £125,000 depending on your situation.
You will have to put some money aside to pay fees such as mortgage broker fees, legal fees and stamp duty. To calculate stamp duty, this website is a good resource.
Can I get a right to buy mortgage to buy my property in Leicester if I am self employed?
Absolutely, right to buy mortgages are available for self employed people. Like a mortgage for an employed person, the lender would need to know more information when assessing your lending potential.
They would need to know whether you are a sole trader, a partnership or a limited company, the profits that you have made in the last couple of years, details about your debts, your financial dependants, and your credit conduct.
Finding the right self employed mortgage that allows right to buy transactions is not easy. We would recommend using an experienced mortgage adviser when looking for the correct lender for you.
Make sure that the adviser you speak to is regulated by the Financial Conduct Authority and on the FCA register.
If you would like I NEED ADVICE to find you an experienced mortgage adviser, please complete the contact form.
What are the challenges that I may face in getting a right to buy mortgage to buy my property in Leicester?
The things that can be challenges in getting a right to buy mortgage in Leicester are factors that may affect you in any other part of the country.
One common challenge when taking a right to buy mortgage is matching the names on the letter with the people that are going on the mortgage. Sometimes it may be that the housing association is only offering the opportunity to buy the property to one individual however that person needs an additional borrower on the mortgage to pass affordability calculations.
Other things to be taken into account when assessing ability and whether a person would be successful in obtaining a right to buy mortgage is the persons income, their debts, their age and credit file.
The process is not straight forward so we would recommend talking to an experienced mortgage adviser.
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Is Leicester a good place to invest into property?
When investing in a place, it is good to know the history of the location and what is available to people living there.
Leicester is a city and unitary authority area in the East Midlands of England, and the county town of Leicestershire. The city lies on the River Soar and close to the eastern end of the National Forest. It is to the north-east of Birmingham and west of Lincoln.
Many people are now benefiting from the exciting opportunities to invest money in Leicester. A construction boom has started and there are a large number of new developments underway.
One reason why so many people are choosing to invest in Leicester is the great potential for rental income. The Leicester rental market has experienced significant growth in recent years and is showed no signs of slowing down. With a strong economy and population growth, property in Leicester is expected to continue to rise in value.
Investment in Leicester has already become a great success, with a number of high-rise buildings and developments underway.
The popular De Montfort University is situated close by, making the area a prime target for student accommodation.
The Enderby area of Leicester is also benefiting from a property boom, with a number of new developments underway. One of the most popular areas for investment in Leicester is the development of the former Gleneagles Golf Course. This area is set to be transformed into a bustling community, complete with new homes, schools and leisure facilities.
With its many regeneration projects, Leicester is sure to continue to attract new investors and developers. With a strong economy, rising house prices and a large student population, there is no reason why some of the finest property in Leicester should not be snapped up by savvy investors.
Some popular things to do in Leicester
1. Visit Leicester Cathedral
2. Visit the National Space Centre
3. Visit the King Richard III Visitor Centre
4. Take a look around the Leicester Guildhall
5. Check out the Newarke Houses Museum
6. Head to the Jewry Wall
7. Visit the Attenborough Nature Reserve
8. Stroll around Abbey Park
9. Take in a show at De Montfort Hall
10. Browse the local shops in the High Street
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Do I need a mortgage adviser that is based in Leicester to be able to arrange my right to buy mortgage?
No, you do not need your mortgage adviser to be based close by to arrange your mortgage. Many mortgage advisers work over the phone and by e-mail which removes the need for a face to face appointment.
With peoples work commitments, they often find that it can be difficult to find time to come to a face to face appointment.
I NEED ADVICE can arrange for a national mortgage adviser to give you a call to explain your options giving you tailored advice. If you would like this, please complete the contact form.
Do you get Leicester right to buy mortgage brokers?
We are not aware of any specific right to buy brokers. However, there will be mortgage brokers with a lot of experience in the Leicester right to buy mortgage market. It is always good to speak to a mortgage adviser with the correct experience.
I have bad credit. Would I still qualify for a right to buy mortgage for my property in Leicester?
A mortgage adviser would be able to work which lenders may be willing to lend to you. They would need to know what your bad credit consisted of. For example, was it defaults, debt management plans, bankruptcies or individual voluntary arrangements?
With this information and a full overview of your situation, a skilled mortgage adviser should be able to work out your options.
Check My File covers all three of the above in one report and offers a free trial.
Can I get a buy to let mortgage for my right to buy property in Leicester?
Your council or housing association would not offer you the opportunity to buy your property at a discounted price if your intention were to immediately rent it out. As a result, you would not get a buy to let mortgage on a right to buy property.
You may be allowed to rent your property out at some point after completion however the council of the housing association that sold you the property would need to confirm this.
If I have bought a right to buy property in Leicester, at what point am I free to sell the property?
According to the website made by the government, if you want to sell your right to buy property within 10 years of buying it, first you would need to offer it at full market value to either the housing association that sold it to you or another housing association.
After eight weeks, no housing association has offered to buy this property from you, you are then free to sell it on the open market.
If you sell your property within five years of buying it, you will need to pay back some of the discount to the housing association that sold you the property in the first place. The amount that you would need to repay decreases each year.
The scale is as follows:
- 100% of the discount in year one
- 80% of the discount in year two
- 60% of the discount in year three
- 40% of the discount in year four
- 20% of the discount in year five
Find more details on the rules of selling your right to buy.
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Leicester is a brilliant city and there are plenty of things to do here. The property market has remained strong in the last few years and will hopefully continue to do the same.
Buying a right to buy property can be a great financial move as it gives you access to equity that you would not have had if you do not have the opportunity to buy your property with a discount.
You should always take professional advice when considering a right to buy mortgage, if you would like I NEED ADVICE to arrange this for you, please complete the contact form.