Mortgage advice on buying a house with equity

ednamay78

Hi we have the chance of buyer our council house that as been valued at 150.000 for the price of £88.500, when I spoke to Barclays they said that there were lenders that would use the equity as a deposit but she did not know which ones they are.
Does anyone know of any ?
Thank you in advance

kingstreet

Right to buy?

As far as I know most lenders do RTB business.

ednamay78

Yes they do but looking for a lender that would take the equity into consideration when saying how much deposit we need

GMS

ednamay78 wrote: »

Yes they do but looking for a lender that would take the equity into consideration when saying how much deposit we need

Plenty will do 100% of purchase price for RTB. Speak to a broker.

kingstreet

You are purchasing a property at a discount. Lenders typically lend upto 100% of the discounted purchase price and you do not have to make a personal deposit, if you choose not to.

In your case it's;-

£150,000 purchase price
£61,500 discount

£88,500 discounted purchase price.

Normal maximum mortgage is then £88,500, 100% of the discounted purchase price.

You may have completely confused Barclays when you started bandying the word "equity" around because until the Council pre-emption period expires after five years, the discount is not your equity.

kingstreet

Yes. And those improvements are tightly controlled by both the lender and by the council concerned.

Borrowing an extra few quid for a new car or a foreign holiday is no longer possible.

kingstreet

You'd be surprised at the number of RTB borrowers who borrowed extra for "home improvements" which were never carried out.

As they are borrowing into the council discount, which is repayable during the first five years, it could cause problems if someone ended up having to sell early.