'right to buy', 1st time buyers - confused about mortgage

lynz_bolton

Hi everyone, this is my first post

• we want to use our 'right to buy' because we will get 33 % off the value of our home, which we are happy in (and couldn't get a mortgage for a bigger/better house anyway!) is this generally speaking, thought to be a good investment for the future?
• we have no savings and it would take us months or years of scrimping to save a 5 or 10% deposit on a mortgage - are there any 100% mortgages out there for 1st time buyers?
• does the right to buy aspect of things affect the mortgage choices?
• would we be able to borrow money to improve the house on top of the mortgage, if the amoutn we wished to borrow was less than the maximum that they were willing to lend us ( at a rough guess i think we'd get this house for under £50000, but i can get it valued and ask for an offer from the council to be sure)

as i say, we've looked around for houses that would be in our range and there just really aren't any. or they're 2 bed ex-council houses, and we're already happy in one of those, and would rather stay put and wait til hopefully, we can afford a bigger house.

i hope my very long (!) post makes some sense and someone can offer me a bit of advice, obviously we haven't a clue about mortgages and buying houses so any advice is appreciated

Thanks!

Lynz x

lynz_bolton

oops
dont know how but a chunk got missed off there, basically it said that we're married, i've just started working full time after going to uni for 3 years then working part time for a year, tony works full time.

we currently rent a council 2 bedroom house with a front and back garden (room for a small extension at the back) and would like to buy it using our 'right to buy'.

our joint earnings before tax are around £26000

and i'm currently on a temporary contract hoping it will become permanent this year.

silverbirch_3

Definitely a good investment, I bought my house on a right to buy 8 years ago. the council valued it at £34000 but with our discount we purchased for £22500. House was valued at £100000 2 years ago when we were thinking of moving but changed our minds.

As for 100% mortgage your discount counts as your deposit as the amount you need to mortgage for is less than the value of the property, depending on the size of your discount you may find you can also have extra for home improvements which we did and had central heating and double glazing installed as soon as the sale went through.

SillyHilly_2

Did you use a mainstream mortgage provider or one that specialises in right to buy?

lynz_bolton

ah good question silly hilly

thanks for all that info silverbirch! never thought of it like that - discount counting as a deposit! we'd like to borrow to replace carpets/fireplace/have front garden made into a drive/decorating/loads of other bits of things that would improve the house.

Lynz

mspig

We purchased our ground floor maisonette using the right to buy scheme, the council came out and valued the property at £35,000 and we got 50% of the price plus £1,000 for the councils time wasting.

So basically we got it for £16,500 we were first time buyers and only my husband was working as i was pregnant.

We got a 100% mortgage with the Chelsea building society at a discounted rate for 3 years.

We also added to our mortgage and took it up to £45,000 for home improvements due to the chelsea coming out within 2 months of the councils valuation and valued the property at £60,000.

We have since sold our masionette in December just gone for £96,500 because we needed a bigger house due to an extension of our family.

Good profit i would say.

However i do have a few recommendations

1) Don't use a right to buy company get in touch with the council yourself they have to send you all the paperwork and guideline booklets on how to do it.

2) To maximise profit don't sell the property within the first 3 years (not sure if it has now gone up to 5 years though), so you don't pay any of the discount back.

3) If there is even the slightest chance that you may have to sell the property within that time make sure that you have no early redemption charges on your mortgage.

4) Find out if you will have to pay for any service charges as they can be quite steep.

5) BEFORE you do this get the council to fix anything and everything that is needed in the property. Once you have applied to buy they are very reluctant to carry out works even before you have completed.

6) It can be a long process as we weren't so bad but a friend of ours has been doing her right to buy for over a year and still no nearer completing.

Apart from that good luck with the process and i hope it all goes through hassle free.

lynz_bolton

thankyou mspig that's really helpful too.
i know those companies on the TV are cons it's obvious but not sure whether to approach a bank/building society differently than normal, do they have qualms about right to buys, do they have a special mortgage package or do they trat it like buying any house.

mspig

Most mortgage companies are willing to take on right to buy due to the fact that the council normally value the property at less than the actual worth so they know that if you can not keep up with your mortgage and they have to repossess the property that they will make there money back anyway.
One company that i would stay as far away as possible from is a company called FUTURE MORTGAGES they are rip off merchants.
They are also deemed as being sub-lenders. Basically not a preferential company to borrow from. I would advise sticking to the main stream banks and building societies.

lady123_2

you need to get your house valued by the council as soon as possible, the council give you 12 months to take up your right to buy at that price, but a lot of councils are starting to value near to market valuations as they can see what previous property's have sold for so get on to the council for your rtb1 form asap, then once you have a figure from the council start asking banks about finance, bank of scotland and hsbc will lend on rtb ex council property's, you could also ask for a draw down facility for home improvements to your house. best of luck

try Charcoal online brokers, pay the £5 and fill in the online form, there's an option for ex local authority right to buy, so you can find out which banks will lend you and at what interest rates, worth it for a fiver and you get that back if you go through charcoal

XXXwendiXXX

I bought my right to buy council house 2 years ago. I trawled everywhere to get a mortgage because I receive family tax credit. I begged and pleaded with Halifax twice and they accepted. My house was valued at 54000 and I received a discount to 36890. I asked for a mortgage of 40000 for double glazing etc. A house like mine sold last month for 115000. I am waiting for the 3 year term to end then I will probably sell for a newer house. Good luck and keep trying, if you get refused by a well known bank/building society make another appointment to see a different mortgage advisor...mine was brilliant, much different from the first one I met who never helped at all............GOOD LUCK !!

lynz_bolton

thanks wendi
as i said we're both earning, although at the moment i'm on a temporary contract, which is likely to be extended and extended until god knows when, rather than made into a permanent one.
so that will cause problems in getting a mortgage i guess.
it's interesting to read about similar ex council houses selling well, because my husand's main concern is that we will not be able to sell it on when we want to move (our minimum stay thing is for 5 years in bolton now, used to be 3)
i'm convinced that we'll sell it because there will be people like us looking for a half decent house to buy within their budget.
Especially if things stay as they are, at the moment there are hardly any houses around for under 70,000 and those which are are in really rough areas or really bad state of repair! So i don't know how 1st time buyers are managing, the only people i know in our situation are 2 couples, both have bought up ex-right to buy houses because they were cheaper to buy.

L