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right to buy confusion

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daffas6688
daffas6688 Posts: 103 Forumite
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in House buying, renting & selling
After waitng a year from enquiry to council to finally being given a price for my property I am now in the need to get a mortgage. I have na large discount of £93,0000. As I am now 54 I was told by others who had bought their proprty in simlilar situations to go for an interest only mortgage and as I intend to move after the 5 years you need to keep it for I would sell then and give bank back their money. The payments would be simliar to my rent payments. But on calling my bank to make an appointment I didn't even get as far as that. I was told that I had to have assetts to cover the loan to the value of the loan. I pointed out the property itself was worth far more than the loan to which they replied they don't use that as they are not in the habit of repossessing property. Seems daft to me. I said I had someone who could use their property as guarantor but again they said no as they would have to be on my property as a buyer too. Obviously this can't happen as it is only my council property and has been offered in my name. Are all banks like this?
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  • Shakin_Steve
    Shakin_Steve Posts: 2,701 Forumite
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    See a mortgage broker, he will tell you what your options are.
    I came into this world with nothing and I've got most of it left.
  • Shakin_Steve
    Shakin_Steve Posts: 2,701 Forumite
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    Oh.....and be prepared to get flamed........council houses are for people who need them and not for you to make a profit out of and all that.
    I came into this world with nothing and I've got most of it left.
  • Mojisola
    Mojisola Posts: 35,557 Forumite
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    daffas6688 wrote: »
    I am now in the need to get a mortgage.

    As I am now 54 I was told by others who had bought their proprty in simlilar situations to go for an interest only mortgage

    But on calling my bank to make an appointment I didn't even get as far as that. I was told that I had to have assetts to cover the loan to the value of the loan.

    Is this because you are asking for an interest only loan rather than a repayment one?
  • mrginge
    mrginge Posts: 4,843 Forumite
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    The bank are telling you that for an interest only mortgage you need to have a repayment vehicle in place alongside the mortgage or they won't lend.

    Interest only is not widely available these days so whoever advised you is still living in 2008.

    As above, look for a repayment mortgage through a broker instead.
  • teddysmum
    teddysmum Posts: 9,471 Forumite
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    It would be insane to offer your property as guarantee for someone else, as you never know what will happen and could end up homeless.
  • Cakeguts
    Cakeguts Posts: 7,627 Forumite
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    The mortgage payments might be about the same as your rent but you will have to pay for everything else on that house all the repairs and for anything that breaks. Anything that the council mends now you will have to pay for so you will have to have spare money that isn't just for the mortgage repayments. If anything happens like you lose your job and you can't pay the mortgage there is no housing benefit to pay the mortgage for you. If anything happens and you lose this house the council will not rehouse you. So unless you have a very good job and lots of spare cash this is a very bad idea.

    You need to try and get a repayment mortgage because you don't have a means to pay off the loan on the house unless you sell the house.
  • gycraig_2
    gycraig_2 Posts: 533 Forumite
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    So you basically want a mortgage with no deposit to only pay interest so you can keep it for 5 years take the discount as profit and give the rest back to the bank ?

    But as above see a broker can't blame people for exploiting stupid systems that are put in place
  • da_rule
    da_rule Posts: 3,618 Forumite
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    It seems like you have asked for a loan rather than a mortgage? If you pass the affordability checks it is relatively easy to get a mortgage on a right to buy as the LTV is relatively low as the discount is essentially your deposit.

    Best bet is to see a broker. You may find that given the discount a repayment mortgage is affordable and has the benefit of decreasing the mortgage value.

    With the discount amount I assume you're in London (as it's capped at £77,900 outside of London), so the property might be relatively expensive even with the discount.

    Also, don't forget that even though you don't have to pay back the discount after 5 years, the Council will have the right of first refusal for 10 years.
  • Shakin_Steve
    Shakin_Steve Posts: 2,701 Forumite
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    da_rule wrote: »
    It seems like you have asked for a loan rather than a mortgage? If you pass the affordability checks it is relatively easy to get a mortgage on a right to buy as the LTV is relatively low as the discount is essentially your deposit.

    Best bet is to see a broker. You may find that given the discount a repayment mortgage is affordable and has the benefit of decreasing the mortgage value.

    With the discount amount I assume you're in London (as it's capped at £77,900 outside of London), so the property might be relatively expensive even with the discount.

    Also, don't forget that even though you don't have to pay back the discount after 5 years, the Council will have the right of first refusal for 10 years.
    Your last point is an interesting one. Do the council, if wishing to buy it back from you, have to meet your asking price....or is there some 'rule'?
    If they do have to meet your asking price, then this surely means that they would just buy any house from anyone. Hmmmmm.....
    I came into this world with nothing and I've got most of it left.
  • csgohan4
    csgohan4 Posts: 10,587 Forumite
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    OP I hope you get what you deserve
    "It is prudent when shopping for something important, not to limit yourself to Pound land/Estate Agents"

    G_M/ Bowlhead99 RIP
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