Raising equity on RTB house

novelli

I purchased my house from council in 2019
it is now rented out .  I have no mortgage as was a cash buyer 
my partner and myself would  like to buy another property to live in as currently renting .   

I know I can’t sell the property without paying some discount back to council for 5 years 
but am I able to raise funds from the property either by way of a loan or by remortgaging.   I had maximum discount as was a long term tenant 
woukd be grateful if anyone had any advice 

thanks 

GDB2222

I don’t see why you should not mortgage, although the amount available will be limited because of the discount having to be repaid if the lender had to foreclose. 

Is it standard construction?

FtbDreaming

There’s a clause saying you can’t borrow more money against the house in the first 5 years. Well that’s the way I read mine anyway which means I can’t remortgage and borrow more and neither is it worth changing providers in the first 5 years. 

Tbh I think you’ll have to sit it out or sell and pay back the discount. Or just get a new mortgage on another property that has nothing to do with rtb house. You’d probably have taxes and whatnot to pay though. 

SDLT_Geek

novelli said:

I purchased my house from council in 2019
it is now rented out .  I have no mortgage as was a cash buyer 
my partner and myself would  like to buy another property to live in as currently renting .   

I know I can’t sell the property without paying some discount back to council for 5 years 
but am I able to raise funds from the property either by way of a loan or by remortgaging.   I had maximum discount as was a long term tenant 
woukd be grateful if anyone had any advice 

thanks 

Are you budgeting for the extra 3% stamp duty land tax on buying your new home?

Chandler85

You'll have to wait and you should do.  Buying a RTB home with cash, then letting it out is against the idea of RTB.  You are meant to be buying the home to live in as your own, hence the restrictions they put on it. 

Should be stricter in my opinion, meaning the 5 years only rolls down while it is your actual home not while you are renting it out, but that's a different issue.

novelli

FtbDreaming said:

There’s a clause saying you can’t borrow more money against the house in the first 5 years. Well that’s the way I read mine anyway which means I can’t remortgage and borrow more and neither is it worth changing providers in the first 5 years. 

Tbh I think you’ll have to sit it out or sell and pay back the discount. Or just get a new mortgage on another property that has nothing to do with rtb house. You’d probably have taxes and whatnot to pay though. 

I haven’t borrowed any money to buy the house though.  It was a cash purchase so no mortgage.  Does that make a difference.  Thanks 

novelli

GDB2222 said:

I don’t see why you should not mortgage, although the amount available will be limited because of the discount having to be repaid if the lender had to foreclose. 

Is it standard construction?

Yes standard construction thanks