The right to buy mortgage is an old scheme – most people associate it with the time of Margaret Thatcher, way back in the 80’s, and therefore think that it is an outdated scheme that no longer has any relevance today. Nothing could be further from the truth, however; the scheme is still alive and kicking today, and benefiting more and more people.

In fact, since the changes that were made in 2012, there has been a serious resurgence in applications for right to buy mortgages. But what exactly is the right to buy mortgage? And how can it help you? Here’s all you need to know.

The right to buy discount

The home you are planning to buy (whether it’s a house or a flat), has a certain market value. This market value is investigated, and thanks to the right to buy scheme, a certain discount is applied – this means that the government finances and supports the buyer to make it more affordable.

The discount depends on the number of years you have been a tenant, the value of the property (and the area you live in), as well as your personal situation. As a general rule, you should be able to get a 35% discount on the purchase of a house (after at least three years of tenancy), and a 50% discount on a flat (also after three years of tenancy). This amount varies based on inflation, the number of years you have been a tenant, and the maximum limit – so be sure to check with the appropriate offices.

The mortgage deposit

When you apply for a mortgage, the mortgage lender is going to require a deposit. This is usually a challenge for lower-income families who haven’t been able to save. However, with the right to buy scheme, often the discount can be used as deposit – which means no other money down is necessary. This depends on the mortgage lender, though, so look around carefully.

Criteria

You’ll be subjected to the same standards as other mortgage applicants – the most important of which is the credit check.

To be fair, you should also be aware that there are some disadvantages to the scheme; one of the greatest disadvantages is that you must buy the property you current live in, and if you choose to sell within five years of buying, you may be required to pay back part (if not all) of the discount you were able to enjoy. There are alternatives, such as Help to Buy and Shared Ownership. However, the right to buy mortgage has been able to assist many people in making their dreams come true, so it’s definitely worth investigating further.

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AS A MORTGAGE IS SECURED AGAINST YOUR HOME OR PROPERTY, IT COULD BE REPOSSESSED IF YOU DO NOT KEEP UP THE MORTGAGE REPAYMENTS.

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