Is it possible to get an Interest only mortgage on council RTB

realitybites

Can anyone help. Is it possible to get an interest only mortgage on a council right to buy. It is a house and the amount to be paid is £160,000, after discount. Are there any conditions, minimum deposit to be paid. We have a combined income of @40k and some money put aside for a small deposit. This will be our first house purchase so any input is greatly appreciated.

newbie1980

not sure about the interest only on rtb but i more that i dont think interest only mortgages are available any more full stop

ExpertAdvice

I would agree there that interest only mortgage are pretty much a thing of past now. However, if you have some sort of repayment vehicle in place showing that it would payoff the mortgage at the end of the term, there might be handful of lenders available provided you put 25% + deposit.

holly_hobby

Yes there are various various lenders that still offer interest only mortgages, WITH a suitable repayment vehicle (savings policies & endowments, pension tax free cash, etc).

However, if you mean can you effect an interest only mortgage with no plans for how it will be paid (save selling the property) either because you can't afford,or simply don't want to service a suitable repayment vehicle, then no those days are gone - and you are looking at a straight repayment mortgage.

RTB business is accepted by various lenders, with the difference between market value and discounted purchase price acting as the deposit, of course your income must be sufficient to support the actual mortgage required, and you'll need a clean credit record to remain on the high street.

See a whole of market broker whom will source a suitable lender given your situation.

Hope this helps

Holly

_Andy_

realitybites wrote: »

Can anyone help. Is it possible to get an interest only mortgage on a council right to buy. It is a house and the amount to be paid is £160,000, after discount. Are there any conditions, minimum deposit to be paid. We have a combined income of @40k and some money put aside for a small deposit. This will be our first house purchase so any input is greatly appreciated.

How would you repay the capital of the mortgage?

Senior_Paper_Monitor

We recently placed an interest only right to buy - as clients had more than adequate repayment vehicle acceptable to lender concerned - but having floated this by a number of lenders to whom it was theoretically in line with criteria the general response was less than enthusiastic - so doable subject to full details of the applicants overall circumstances.

HappyMJ

realitybites wrote: »

Can anyone help. Is it possible to get an interest only mortgage on a council right to buy. It is a house and the amount to be paid is £160,000, after discount. Are there any conditions, minimum deposit to be paid. We have a combined income of @40k and some money put aside for a small deposit. This will be our first house purchase so any input is greatly appreciated.

If you set the term as long as you can then it'll almost be an interest only mortgage as any repayments in the early years pretty much only cover the interest charged. So when the mortgage advisor asks you when you would like to retire say 70...and if you are 30 now you could have a 40 year mortgage. You could even get a longer term if you pick the right lender.

realitybites

Thank you all for the informative advice.

realitybites

_Andy_ wrote: »

How would you repay the capital of the mortgage?

Have a lump sum of £100k payable in about 18 months but with the market starting to gain momentum can't really hold on too long.

Mokka

If you have the money coming in you should apply ASAP. You can always withdraw at any stage and it's free. It will take the council 4 months to give you a valuation and much longer before you can complete. I applied in February and I am still far away from the purchase. The valuation will be fixed so price rises since the date of your application will not affect you. Also you have a right to take over 3 months to make up your mind. And you might want to appeal against the Council's valuation, which is another month at least.
Before you know it, 18 months have passed... or maybe more if your council is as incompetent as mine.

You should read all the info about RTB so you understand the process. I think you can easily stretch things out for 18 months

Also your discount counts as a deposit (with these lenders who do RTB- some run away screaming!)
If you haven't applied for RTB yet I wouldn't worry about a mortgage at this stage.
Borrowing £60k should be easy (unless you live in a concrete tower block on a no-go estate which is a gangland warzone...)