Right To Buy - Guarantor Mortgage Options

mustard1066

Hi

I have some very close family members who wish to buy their council flat under the Right To Buy scheme (England). As they have lived at the property in London for over 25 years, they should be entitled to a 50% discount. The family members are mother and daughter; daughter working full time and mother part-time/pensioner.

Their joint income is unlikely to cover the mortgage repayments (based on 60% LTV research) - so I have offered to help them out and make up the difference.

I have done some research and believe the best option is for me to act as a guarantor for their joint mortgage application (as far as I am aware).

A few questions ...

1. Is this a valid, or the best, option based on the circumstances outlined above?
2. Should I go via a mortgage broker or are their some High Street Lenders that offer these mortgage type?
3. Will the discount be enough to satisfy any deposit requirements, or will a deposit still be required.

Thanks in advance for any help the forum can provide.

Senior_Paper_Monitor

1. No it isn't - there are no guarantor mortgages for right to buy
2. Neither - as above - an imaginative broker may come up with an alternative 'acquisition funding' option, although a bank almost certainly won't.
3. In most cases yes (but academic if a mortgage cannot be acquired on the RTB property acquisition as I forecast)


- my qualifications for the above statements ... working for a company that has page 1 google rankings for both 'right to buy mortgages' and 'guarantor mortgages', so I see lots of these individually and jointly.

mustard1066

Thanks for the reply.

So, would it be fair to say that the only option may be to become a joint applicant with one of those entitled to buy?

Cheers

Mokka

I am afraid you can't- unless you are one of the ladies' partner and have been living with her for a year.
This situation seems a bit hopeless to me:
if the ladies can't afford to buy- they shouldn't be getting themselves into this situation. I am guessing more well off family members are keen to acquire a share of the property but this doesn't seem to be in the two ladies' best interests.

mustard1066

Nothing is ever hopeless!

Obviously the income is lower than that required of certain mortgages, but hopefully there are SOME options out there. Hence the post on this board.

I have looked on the Right To Buy website and it states that other family members can provide the money to help buy the property but they wont be entitled to ownership. This is not an issue.

Like I said earlier in the thread, I can assist/cover any deficit in the mortgage. So, our aim is to explore what the options are to make this work.

Cheers

Senior_Paper_Monitor

A simple rule - if anyone is on the 125 offer letter they must be on the property mortgage and they cannot be on the mortgage if they are not on the 125 offer letter.


Any funding for this acquisition will have to be raised elsewhere if I have understood your post correctly.

mustard1066

Looks like we may need to consult a broker.

Thanks for the info.

Mokka

You are confusing 2 issues.
-LA will be happy to accept money from a family member (cash).
-Lenders will not be happy to issue a guarantor mortgage for a Right to Buy property, as the broker specialising in RTB told you. Which is interesting, as my Local Authority advises people that they CAN get a guarantor mortgage- but then they are in a league of their own in incompetence.

If you have cash to spare you are welcome to lend it to the ladies. If you are trying to talk them into taking the mortgage themselves, which you would guarantee, it's a no-go.