Buying through Right to Buy
Purchasing a house through the Right to Buy scheme is almost exactly the same as buying a house in any of the traditional ways, in that it will require you to take out a mortgage in order to afford to do so.
In order to work out the total price of the house you are looking to buy, you will need to deduct the discount that you may be given, as well as the value of any money that you have saved up previously from the overall valuation of the property.
There is no shortage of mortgage lenders that are willing to take applications for Right to Buy properties. Most of these will lend prospective buyers up to 95 or 100 per cent of the discounted price of the property and will use the Open Market Valuation (OMV) to calculate your loan-to-value.
Some Right to Buy mortgage lenders will set their rates based on the OMV rather than the standard RTB Price and these will usually allow borrowers to receive up to 85 per cent of the OMV.
Other costs to consider with Right to Buy
On top of the mortgage costs, you will need to bear in mind all of the other costs associated with the Right to Buy scheme. These include council tax and water bills (which would previously have been coming out as part of your rent), and buildings insurance, which covers potential damage to the structure of a property. It is also strongly recommended that you have contents insurance, although this may well be included as part of your current tenancy agreement.
If the property that you are looking to buy is a flat, you will usually have to pay an annual fee to contribute to the repairs and maintenance of the building as a whole.
It is also worth bearing in mind that buying your home through the Right to Buy scheme will affect your benefits. While you were a tenant, you may well have been eligible for housing benefit in order for you to pay the rent. However, once you become a property owner this benefit will no longer be available to you, so you will have no help to cover the cost of mortgage payments.
Should you find that you qualify for the Right to Buy scheme, you can be entitled to a discount on the purchase price of your house. In order to be an eligible applicant, you will need to have been a tenant in a public-sector property for at least three years.