Right To Buy

wozzza72

Hi
So I have just completed a 'Right To Buy' on my council house, we have a Nat West mortgage on a fixed rate for 5 years. We were told we had to go the repayment mortgage route but what is now stopping us changing the mortgage to an interest only? We would like to take equity out of the house to buy another property to rent out.

Edi81

Getting the popcorn out for the ethical side of this! 

K_S

wozzza72 said:

Hi
So I have just completed a 'Right To Buy' on my council house, we have a Nat West mortgage on a fixed rate for 5 years. We were told we had to go the repayment mortgage route but what is now stopping us changing the mortgage to an interest only? We would like to take equity out of the house to buy another property to rent out.

@wozzza72 Within the pre-emption period (first 5 years after you have completed on an RTB purchase), when you do a remortgage, your local authority will have to approve the additional borrowing. They will only do so for a limited set of reasons, which does not include raising cash for a deposit. So you'll have to wait for 5 years before you may have options.

On a slightly tangential note, I wasn't aware of this until recently, but you are allowed to rent out the property from day 1. This also requires council permission but the requirements to get approval aren't usually onerous.

london21

wozzza72 said:

Hi
So I have just completed a 'Right To Buy' on my council house, we have a Nat West mortgage on a fixed rate for 5 years. We were told we had to go the repayment mortgage route but what is now stopping us changing the mortgage to an interest only? We would like to take equity out of the house to buy another property to rent out.

How will you change the mortgage to interest only when it was approved for repayment?

Interest only usually easier with BTL than residential home.

To take equity out might have to wait for the 5 years perid to lapse and depending on lender's requirement some dont allow equity release for BTL investment.

snappyfish

Edi81 said:

Getting the popcorn out for the ethical side of this! 

All this pop corn you mugs eat is bad for you. 

wozzza72

Thanks for the 'intelligent' answers, not sure what the point of the the other two are!

K_S all understood 

london21 - This is why I was curious, could I actually change my mortgage any time to a repayment. I was under the impression we were locked in for 5 years but a friend has told me that was not the case.

K_S

wozzza72 said:

Thanks for the 'intelligent' answers, not sure what the point of the the other two are!

K_S all understood 

london21 - This is why I was curious, could I actually change my mortgage any time to a repayment. I was under the impression we were locked in for 5 years but a friend has told me that was not the case.

@wozzza72 In theory, there's nothing stopping you from paying the NatWest ERC on the current 5-year fix capital repayment product and re-mortgaging to an interest-only mortgage with another lender.

However, in practice you'll first need to have those products available (i.e. interest only RTB residential remortgage products) and meet the eligibility criteria for the interest-only. To take the example of NatWest, some of the criteria are min 75k/100k income for sole/joint application, acceptable capital repayment vehicle, etc.

I've never had any RTB cases that asked for interest-only or would qualify for interest-only lending from mainstream lenders.

snappyfish

wozzza72 said:

Thanks for the 'intelligent' answers, not sure what the point of the the other two are!

K_S all understood 

london21 - This is why I was curious, could I actually change my mortgage any time to a repayment. I was under the impression we were locked in for 5 years but a friend has told me that was not the case.

Basically, people on here absolutely HATE the right to buy. They will attack you at the earliest chance because you took the deal. 

wozzza72

Why would anybody NOT take a sizeable discount to buy the house they are living in? Jealousy maybe?

simon_or

wozzza72 said:

Why would anybody NOT take a sizeable discount to buy the house they are living in? Jealousy maybe?

Not a fan of the scheme at a societal level but as an individual if I had the right to buy, I know I would definitely exercise it! 😁

powerful_Rogue

wozzza72 said:

Why would anybody NOT take a sizeable discount to buy the house they are living in? Jealousy maybe?

Theres a difference on buying it to continue living in and buying it to then rent out.