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Right to Buy: myth-busters for your clients

A large number of clients who could qualify for the Right to Buy Scheme are falling out of the process, even when they’re eligible for a mortgage, because of misconceptions about the scheme.

Our myth-busting guide is here to help correct that.

MYTH: You need a large deposit to take advantage of Right to Buy

Some mortgage lenders, including Together, will accept your client’s Right to Buy discount as equity – meaning they may not need to find a large cash deposit.

This is because we recognise the market value of the property is not impacted by the fact it’s a Right to Buy case.

MYTH: Right to Buy doesn’t apply to housing association properties

This is mostly true, although a pilot scheme is currently underway in the Midlands. This parallel scheme – ‘Voluntary Right to Buy’ – mirrors the discounts and qualifying criteria of the standard scheme; housing associations in over 70 local authorities across the Midlands are taking part.

It’s worth noting that some Housing Associations have opted out.

MYTH: Council tenants’ credit ratings mean they’d never qualify for a mortgage

Council tenants are no less credit-worthy than anyone else. Although it is true that council tenants may have less credit history, or may have experienced credit blips in the past, here at Together we can often lend even with this in mind.

We let an underwriter make the final decision to lend, because they can take the client’s individual circumstances into account.

MYTH: Mortgage payments are more expensive than rent

Not necessarily. The repayments on a mortgage will depend on how much your client is borrowing, and over how long. For clients with large discounts, and inexpensive properties, their mortgage payments may be cheaper than their current rent.

Even if their payments are more than they’re paying at the moment, they have the peace of mind that they own a property, and they’re not spending money they’ll never see again.

MYTH: Many council houses are ‘unmortgageable’

It’s true that many council homes built in the post-war period used some unconventional construction methods and materials. But many of these have proven more hard-wearing than planned, and continue to be well-loved family homes.

Some mortgage lenders have very narrow lending criteria when it comes to these properties, and won’t lend on steel-framed or concrete-made homes. Together, on the other hand, will gladly consider these cases.

MYTH: You have to be at least 23 to take advantage of Right to Buy

Whilst you do have to be a tenant for at least five years, you could join forces with other members of your family who are eligible for the scheme, as soon as you’re 18, even if they wouldn’t typically qualify for a mortgage.

19th October 2018

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