Right to Buy Council House and Re-Mortgage

alwaystired

Hi, I hope someone can help. My daughter bought her Council House just under two years ago. She was advised at the time by a Mortgage advisor take out a "right to buy" mortgage. This was with the Abbey. She is now looking to re-mortgage because of lower interest rates available elsewhere. The "new" mortgage has been arranged with Brittania. My daughter has now been told that the Council has a charge on the property (!). I understand this up to a point if she was trying to sell the house early, but she is just re-mortgaging. Can anyone offer advice about this please ?.

Always Tired

toonfish

basically the council hold a legal charge over the property, related to the given discount for 3 years, therefore the lender is unable to get 100% charge on the property. This is why a lot of lenders will not do right to buy.

wardlaw

You are quite safe to go ahead and re-mortgage There are very few lenders who will not entertain RTB mortgages.
Indeed most will lend above the discounted price

One year on your daughter will own the property out right, as the L.A. charge will be taken off the Title Deeds Think of all that equity she will have gained over the first 3 years, compared to a private house purchase !!! You daughter has done really well

Nothing for your Daughter to be concerned about

John

JasonLVC

Right to buy allows the home owner to change mortgage lenders without any affect on the pay-back to the council for an early sale whilst within the payback period. Only a sale to someone else will cause problems.

Not many lenders will have an issue with RTB lending. The charge the council have is not one of owning the property in the event of a defaulted mortgage, usually, the charge on the deeds is that the property cannot be sold within a specified time without consent from the council - this is to stop people getting the big discount and then selling the house a few weeks or years later - any bank or solicitor will be compelled by law to inform the council.

It should not in any way stop a remortgage taking place. Sounds like the person who told your daughter about the charge isn't too clued up on this thing. They must think the council will get to keep the house but that's not the case, once sold, the house is your daughters - Council has no control over it, no right to buy it back or unsell it. But they do have the right to stop you selling it early without your daughter paying back the discount she originally got. If your daughter defaults on the mortgage the house belongs to the bank, not the council....but should the bank then sell the house to repay your daughters 'debt' the bank will have to repay a proportion of the discount she recevied back to the council, although in practice that rarely, if at all happens....council and bank don't do anything.

Trust that makes sense, go back to bank and talk to someone who knows what they're talking about. (I'm an ex-RTB Manager at a council, been a while, but the law ain;t changed to my nkowledge, so be assured the bank are wrong....not a surprise there then!.)

homer_j_3

providing that there are no further monies being borrowed to the original amount it should not be an issue.

If there are then the council may want disclosure to what they are being raised for. Each council will have its own rules but normally Debt consolidation in my area is a no go.

alwaystired

Thank you all for your very helpful replies. Further to my Daughters situation, she has received a letter from the Britannia's solicitors stating (heavily paraphrased here !) that they want to charge her £150 to make some sort of "enquiries" with the Council whch they have said should just be a formality. Should my daughter be able to make these "enquiries" and get some sort of formal response from the Council which she could send to the Britannia ?. Any help appreciated, I have never had a mortgage myself so I find myself in a position of total ignorance in this matter.

Always Tired

heavenly_heaven

i agree with all comments just wanted to add that i am in a similar situation i have a charge as i bought July 04. i wanted to take some cash towards a new place and settle a major work bill from the council. i have been informed by my council that any costs towards improving the house can be allowed but noting else during the present period but i have been ok to remortgage but without the full funds so i decided to wait until july!

JasonLVC

alwaystired wrote: »

Thank you all for your very helpful replies. Further to my Daughters situation, she has received a letter from the Britannia's solicitors stating (heavily paraphrased here !) that they want to charge her £150 to make some sort of "enquiries" with the Council whch they have said should just be a formality. Should my daughter be able to make these "enquiries" and get some sort of formal response from the Council which she could send to the Britannia ?. Any help appreciated, I have never had a mortgage myself so I find myself in a position of total ignorance in this matter.

Always Tired

Most unusual. Usually the lender offers free conveyancing (ie, free legal fees) and this should cover all enquiries such as this. Perhaps an extended enquiry into missing planning consent may require more time/fees, but not to clarify a charge which they should already be aware of. I'd go back to Britannia and refuse the £150.00 charge, that's very high for a letter|!. Daughter could enquire with council legal department and they may provide a letter for a smaller charge or even free. Definately worth a try as £150 is quite steep and the solicitor will only write to council solicitor anyway.

homer_j_3

have been thinking about this and are you sure its for a letter? Could it be title insurance cover so they dont have to write to the council?

Mr_helpful

I am wondering if its for a deed of postponement.

alwaystired

Thanks once again for the responses. I will get hold of the letter off my daughter and check what is actually written. I have been doing this (so far) at a distance and haven't seen all the paperwork myself. I will get back to you all (I'm hoping that's O.K) when I have the full facts at my disposal.

alwaystired