RTB advice please

Handywoman

Hi


We are thinking about buying our house but not sure how is best to go about it?


I know that living in London we would get £100,000 discount on the property (we have been here 10 years). I have not yet approached the council for a valuation but expect the house to be valued around £380,000.


Would we need a deposit? Or does the lender see it as the discounted price/mortgage amount as their security (ie, house worth 100k more than they are lending?)


Should we use a company like eloans co-op (formally right to buy co-op) - found through a quick google search. Or is this a bad idea? I made an initial enquiry and they have been pretty constant in their communication since....


Any help, tips or advice greatly appreciated.

Handywoman

Anyone have any pearls of wisdom?

lonestarfan

To give you some advice you need to give info about what age you both are, what salary you are both earning.

Kittycat1981

We did our RTB through TSB our bank. they used our 45% discount as a deposit. It was pretty easy and painless to do with our bank. The Local Authority on the other hand dragged their feet and took longer than the recommended time for each step of the process.

We applied for the RTB- waited for an eternity to get response- then once we had it and their valuation we approached our bank to see if they would lend to us- DIP done- sent forms back to LA- instructed a solicitor- did the full application within a day of each other, got the valuation back a few days after then- waited and waited and waited on LA and searches, exchanged and completed. DIP was 1st December, completed 16th March 2015, originally applied for RTB in July 2014.

Longest part was as i said the LA bits, the mortgage DIP, solicitor, full application and valuation was all done within 8 working days.

We have been in our house 14 years -almost 15, in all that time the local authority have done ziltch. We had the house re-wired, new kitchen and bathrooms etc done ourselves and at our cost. After all we had to live in it and. They have done no repairs and i was fed up of waiting for the regeneration scheme (which seems to have hit every street but ours) so thought sod it, im buying it. The rent has increased year on year and the money we have put into i already made it a no brainer to buy it. Our mortgage is small and will be paid off in 6 years.

We plan on moving to another house in a few years time and letting this to the kids (of course for next to nothing but enough so they have to take some responsibility and live adjust to living in the real world!) - we live very close to a university that the kids will more than likely attend.

Mokka

Looking for a mortgage usually involves searching for best deals in your circumstances, not jumping at the first (possibly dodgy) lender which comes up on Google.
Even with this discount you would need a huge mortgage. Unless you have a very good joint income it won't be easy to get it. Going with a bad deal aimed at naive borrowers you might soon find yourself without a roof over your head, whether owned or rented.

dimbo61

Worth finding a broker to look at Income, age, etc and see if this is possible

audigex

(Below is an amateur opinion, I'm not a financial advisor/professional in any way)

Remember that there's not really such thing as a "deposit" there's just "the amount of the house that you'll own outright"

Try to think in terms of loan-to-value (LTV) and equity, rather than "How much cash do I have?". The lender doesn't care why you only need £280k for a £380k... they care about the fact that the house price would have to drop by over 26% before they'd lose any of their money, or that you'd have to miss your payments for quite a long time before they couldn't recoup their losses from your 26% share of the house.


That makes you a fairly safe bet, as long as you can afford the monthly payments: for which you need to do two things.

1) Add your incomes together and multiply by 4.5. If that's much under £280k, you probably can't get a mortgage for that amount.

2) Find out the monthly repayment you'd need, and work out if that's affordable for you. For a £280k mortgage over 30 years that should probably work out at around £1000 a month at current rates (a quick search on the tool on this site shows anywhere between £950 for a 2 year fixed rate, but you'd need £2k up front and £1100 for a 5 year fixed rate with no setup fees)

If you pass test 1 you should probably be able to get a mortgage, and then you need to decide if you can afford £1000+ for the mortgage and your bills and other expenses on top (realistically I'd want to be able to afford at least £1300/month to account for moderate interest rate rises).

If you can pass #1, you should be ok with #2, as that's kind of the point of the 4.5x multiplier, but it obviously depends on your circumstances. All of this assumes a clean credit record and no other significant outgoings/debts.

Handywoman

Thanks for the advice everyone.


The eloans people have been non-stop which makes me suspicious and I've asked them to leave the next contact to me - which seems to have worked.


As for term of mortgage, I think we would struggle to get a 25year because of age.


People asked for a bit more info to comment further;


Married, 3 kids (9-13), I'm 34 my husband is 43 (soon to be 44).
I earn 35,000 and my husband 28,000.
We currently get £2280 per annum Child Benefit.
We pay £176 a month for our car.
C.Tax is £150 a month.






I have the opportunity to work overtime if needed but I tend not to at present as I am studying.
The property prices in London are crippling. We have both lived in London all our lives and with our eldest in the local OFSTED outstanding school, we need to stay put until the kids secondary education is finished before we would move; that's another 9 years. We are at the stage where we either buy this or rent forever. It's all a bit daunting.


Thanks for any advice.

Handywoman

Kittycat1981 wrote: »

DIP was 1st December, completed 16th March 2015, originally applied for RTB in July 2014.

Longest part was as i said the LA bits, the mortgage DIP, solicitor, full application and valuation was all done within 8 working days.
.

Thank you for taking time to reply, your experience is very useful. Did they take off the value of improvements you have made?


For example, we have paid to have a dropped kerb and driveway as parking a premium here. We have also put a conservatory on, as well as all the interior decorating...

csgohan4

Handywoman wrote: »

Thanks for the advice everyone.


The eloans people have been non-stop which makes me suspicious and I've asked them to leave the next contact to me - which seems to have worked.


As for term of mortgage, I think we would struggle to get a 25year because of age.


People asked for a bit more info to comment further;


Married, 3 kids (9-13), I'm 34 my husband is 43 (soon to be 44).
I earn 35,000 and my husband 28,000.
We currently get £2280 per annum Child Benefit.
We pay £176 a month for our car.
C.Tax is £150 a month.






I have the opportunity to work overtime if needed but I tend not to at present as I am studying.
The property prices in London are crippling. We have both lived in London all our lives and with our eldest in the local OFSTED outstanding school, we need to stay put until the kids secondary education is finished before we would move; that's another 9 years. We are at the stage where we either buy this or rent forever. It's all a bit daunting.


Thanks for any advice.

Please don't use anyone you pick up from Google, sounds dodgy and it will only end in tears.


Get an independent broker fee or fee free up to you. Either search for your local brokers (Not attached to Estate agents!) or go on review websites and see whats around.

Amara

In theory, authority should take improvements on account, in practise, I don't know.