right to buy / mortgage advice please

helpme!_4

Hi hope someone can help, this is first post so also hope its in right place.
my oh has livedin council housefor years. i just moved in 6 month ago. Applied to buy as found out having 1st baby and house needs desperate work doing so needextra money. Council say i cannot buy as havnt lived there 12 month and oh is not working, long term sickness so cant get mortgage. Want to make house nice for baby so went to mortgage broker to see if any way of getting round this. She advised i go guarantor on mortgage and then do a tranfer of equity and remortgage into both names after a couple of months. Dont know if the council would count this as selling and ask for discount back? and also broker siad no costs to remortgaging. Is this correct? Really dontknow what to do as cant afford to sort house before baby without the extra money, any help appreciated thankyou

Conrad

Im very suspiscious. Dont hand over any fees to this broker yet.
Ive never heard of a RTB with a guarantor.

Also it always costs to remortgage. Even high st lenders now are charging very large fees. Also there are always exit costs from the current deal. Note with RTB cases the exit costs can be huge especially with sub - prime lenders which tend to get involved with RTB.

Hopeful my response has just saved you a ton of money.

Sounds to me like the broker is a shark simply out for large upfront fees from vulnerable people.

JasonLVC

There are some misunderstandings here.

If OH has been in property more than 2 years he has the Right to Buy. It is not for the council to determine how the purchase is financed and so him being on benefits is irrelevant - but it may mean someone in Benefit Fraud department may take an interest.

You need to be a joint tenant to buy (ie, both names on council rent book) so you must not be named in rent book for them to say you've not been there long enough. Some people do this to claim the "living on own" discount on Council Tax and/or occupy another council house elsewhere thus claiming two amounts of rent benefit, etc - not suggesting you are but this is why these rules are put in place.

This means they can ONLY sell the house to OH as he is only name on lease/rent book. His problem is he can't afford the property!. He can obtain a mortgage and seek a guarantor but this means someone would have to sign documents accepting liability for any default. Who's going to do that?. If you, then you must have a pretty good credit rating to obtain this gaurantee. Sometimes the lender will act as gaurantor but they will make a big charge for this risk they are taking, which will be added to loan value thus increasing your debt/monthly payments and liklihood of messing up and defaulting on mortgage.

Assuming all okay, once purchased the deeds will be in OH name only (so again, if you are gauranteeing his debt make sure he don't kick you out once contracts have exchanged as HE owns the house, not you - seen this many times before and nothing you can do about it!). Assuming he loves you, you then ask solicitor to add your name to the deeds. This will cost about £200 to do and is quick and easy. You are not 'selling' the house, just adding your name to the ownership documents and so will not be seen as a sale. Not sure where you've got equity exchanges and remortgages from. All false anyway. OH has to give permission to solicitor to add you onto deed and leave it for solciitor to sort out.

You can sell the house anytime of course, but you'd have to pay back any discount on a sliding rate, plus, you are unlikely to get back onto council housing register - even if you get into debt and have to sell property, council will see this as you making yourself homeless, regardless of kids.

Sorry this is a long post but there's a lot to write. One final thing. With OH not working (and assuming you are working) now is not the time to buy a council house. You will be off work for 9-12 months on statutory maternity pay which is around about £90 p/week and even if you are both on benefits and not working you will have a massive drain on your income from the mortgage. Also, you will lose any rent allowance you get paid already and the monthly mortgage will be more than the monthly rent - trust me I am an ex-right to buy manager and know the score.

As this is a money saving site, I strongly urge you NOT to buy the house yet. You sound as if you are not good with money by the way you are wanting to decorate your house before the baby is born and to do this you want to take a mortgage out!?. Most folk get some pink wallpaper from B&Q not buy a house!. No offence meant but your priority here is very wrong.

Get a bank loan to cover the costs of house decorations (and if you can't get an unsecured loan due to your history then definately don't get a mortgage - it will cripple you). All council houses have to achieve certain living standards and so major work like kitchens and windows will be done by them. Once you buy, you get no help. Certainly check to see if there is an upgrade programme due in your area as it may be worth hanging on, getting them to do upgrades and then buy house.

There is no rush. Trust me, once kid comes along you ain't got time to decorate and it will take between 2-3 months for the sale to go through assuming everything is good so I'd say wait for now, adjust to family life, right to buy will always be there and values will not increase too much as council houses are not valued the same way as 'normal market properties' due to stigma attached to council houses.

JasonLVC

Conrad wrote:

Im very suspiscious. Dont hand over any fees to this broker yet.
Ive never heard of a RTB with a guarantor.

Also it always costs to remortgage. Even high st lenders now are charging very large fees. Also there are always exit costs from the current deal. Note with RTB cases the exit costs can be huge especially with sub - prime lenders which tend to get involved with RTB.

Hopeful my response has just saved you a ton of money.

Sounds to me like the broker is a shark simply out for large upfront fees from vulnerable people.

Well said!. Ocean Finance and all the other right to buy companies basically market their service to poor folk who can't afford a mortgage, charge them hidden admin costs of upto £2,000 (but added to mortgage so don't worry about it!) and also charge way way above bank rate mortgage interest between 12% to 25% -

OP. A mortgage is the single biggest debt you will ever sign up to and the debt is secured against the house so mess up and you'll be on the street and the council is not oblgied to house you as it's your own fault for getting into debt - and all becuase you want to decorate the place for the new born?.

If you have any more questions about this mortgage or money in general than please post away!. Take care now Mum to Be!!.

helpme!_4

thankyou jasonfor helping, just wanted to clear some stuff up. We do not claim any housing benefit or anything like that so benefit fraud department can be interested all they want. I pay full rent, council tax and bills. I will only be taking the 6 weeks mat leave as cant afford any more as you say, still have the same amount of rent etc to pay and mortgage would work out at same price. Just didnt want everyone to think i was draining the benefits system, im not have worked all my life and plan on continuing to do this....thankyou all for your help...

housedoesnt need just decoration, needs major work eg bathroom is not big enough for a bath! so need to take some of bedroom up

JasonLVC

No offence meant HelpMe. I've no problem with people on benefits but could only guess from what you'd posted.

You could always try a house swap with another council tenant - most council hold a book of properties (ie, pensioner wants to move down to a smaller 1 bedroom property or want to move to an area within the borough for some reason) - definately worth a look as you might get a nicer house in another part of town.

If mortgage/rent are same price and you are comfortably happy with your money skills then by all means buy the property - I'd still wait until child was born as Mum's usually change their mind about going back to work (my OH's work has many women go off on maternity leave with vows to return and never do or come back part-time instead - either way your income dips!).

You can do structural works to a council house, provided you get permission from them first and indeed, under the Decent Homes Standard which Councils abide to, they have to ensure your property is habitable. If it doesn't have a bath and you have a kid then tell them and they are oblgied in law to sort something out for you (ie, put a bath in!). Suggest you talk to either a housing officer or housing need officer at your local council, again, they may be able to line you up for another property perhaps - but don't get your hopes up!. Council cannot allow you to have a child with no bath and indeed once over the age of (I think 4 or 5) they have to have their own bedroom too.

There's quite a lot out there to help council tenants so maybe enquire before making the final, informed decision. And one final thing on mortgages, some naughty brokers will keep your monthly mortagage payment the same as your rent to make it look like a good buy - but they'll usually have the mortgage over 35-40 years to hide the higher interest rate being used. Bottom line, ask how much the total cost of the mortagge will be. That is, if you are borrowing £30k, an average mortgage over 25 years will be roughly double the loan (ie, £30k x 2 = £60k). If your total owed is more than double the money you are borrowing then you've not got a good deal - but this is a very rough calculation but a good indication of the total debt you are signing upto.

danjberry

just thought i would tell you when carrying out a transfer of equity the mortgage lender will need to know, and will carry out their own process to add your name to the mortgage and will probably charge you a fee to this

Missy79

I know how you feel OP the council should do many things to properties however they don't (I had some damp on a wall, pointed out to housing inspector who talked some rubbish about "it's from when it was plastered, call us back if it gets worse" - district valuer since confirmed that it is damp due to water running down the wall.)
If you're desperate to get these things done and you're confident that you're going to go back to work then there's no reason you couldn't buy the house assuming that your partner has been in the house long enough.
You need to clarify whether he would have Right to Buy or Right to Acquire as the discount varies depending on which option you have. If he has right to buy at least you will continue to accumulate a discount if you don't buy now (Check what maximum discount is) and you could buy it jointly in the future once you've been in the property long enough.

Conrad

Jason

She wont get a right to buy mortgage on a guarantor basis. Garantor mortgages are for those who can demonstrate a clear and simple exit stratergy, for example a father whos son is about to qualify as an accountant where the sons wages as a result will soon double.

Everything else is largely irrelevant.

JasonLVC

I've seen examples of a third party (like a relative) offer a guarantee against a loan - but as I pointed out, they don't give them away for nothing and did suggest to the OP that it was unlikely they'd let her be a gaurantor herself.

In business, again, I have experienced company directors acting as gaurantors against another businesses loans or rental commitments in order to nurture growth or develop a new product line - but clearly not for a mortgage and a different sector anyway!.

To be honest, sounds like OP's been strung along by a salesman, making promises they can't keep - but the mortgage market in the right to buy sector is increasingly ingenious in getting money from people so whilst I accept your point entirely, I wouldn;t put it past a lender to turn a blind eye.

It's like those self-assessed mortgages where you can borrow more or less any amount you like agains - God awful idea and not in true MSE spirit.

Right to buy applies to Council houses whereas Right to Aquire relates to ex-council stock transferred over to a Housing Association but unless the laws changed in the last few years the rights and sicount should be the same. It's different if the house is a new/always owned by the housing association but seeing as OP mentioned Council am guesing it's a council owned house.

AndyWallace

Official Guide on Buying Your Council Home, published by the Office of the Deputy Prime Minister:

Click Here

Andy.