Are there any conditions when it comes to remortgaging a property previously purchased under the council's right to buy scheme?
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steve19720
1 month ago
Expert Financial Adviser Answer
Paul Skinner
answered 1 month ago
Hi Steve,
When you buy a council house you receive a discount. The council usually stipulate that you do not sell the house within a number of years or they will ask you to repay a proportion of the discount. Most lenders will not allow you to remortgage until this period has expired. Some lenders will only accept a mortgage application if the majority of the houses on the estate are privately owned.
One other thing to be aware of is that some council houses are of an unusual construction, such as concrete, rather than traditional brick built. If so, then this could cause an issue with some lenders.
Hope this helps.
Feel free to call if you need anything else.
Regards
Paul Skinner
PKS - Mortgage and Insurance Experts
T: 0845 226 5009
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When you buy a council house you receive a discount. The council usually stipulate that you do not sell the house within a number of years or they will ask you to repay a proportion of the discount. Most lenders will not allow you to remortgage until this period has expired. Some lenders will only accept a mortgage application if the majority of the houses on the estate are privately owned.
One other thing to be aware of is that some council houses are of an unusual construction, such as concrete, rather than traditional brick built. If so, then this could cause an issue with some lenders.
Hope this helps.
Feel free to call if you need anything else.
Regards
Paul Skinner
PKS - Mortgage and Insurance Experts
T: 0845 226 5009
Expert Financial Adviser Answer
Darren Smith
answered 1 month ago
Hello Steve
if you are looking just to switch lender and not increase the loan amount, and you are within the discount clawback period, you will usually be able to change lender on a like for like mortgage loan basis. Some will allow you to increase the loan BUT only for home improvments and their guidelines on this will be very strict. If you are outside of the clawback period, you should be fine as long as you meet the lender criteria for what you wish to apply for.
never a straightforward question to answer as you have quite given all the details needed but you might be able to achieve what you are looking for.....
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if you are looking just to switch lender and not increase the loan amount, and you are within the discount clawback period, you will usually be able to change lender on a like for like mortgage loan basis. Some will allow you to increase the loan BUT only for home improvments and their guidelines on this will be very strict. If you are outside of the clawback period, you should be fine as long as you meet the lender criteria for what you wish to apply for.
never a straightforward question to answer as you have quite given all the details needed but you might be able to achieve what you are looking for.....
steve19720
answered 1 month ago
Thank you both for your replies. Would you know if the clawback is for period a set amount of years for each council, or does it change? From what I recall, we have to pay back the council's discount if we sell within 5 years, although I can't see anywhere where it says in our deeds or the right to buy agreement that we can get additional funding for home improvements when we remortgage. Does anyone know why these stipulations are in place for additional funding?
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Expert Financial Adviser Answer
Darren Smith
answered 1 month ago
the restrictions on additional lending are based on being able to repay the value of the discount from the equity in the property if you were to sell or breach the RTB rules.
there will definitely be a date in your legal contracts to confirm the date for the RTB clawback and their legal charge will most likely also be registered with land registry.
if you are unsure, cannot locate the documents etc contact the solicitor that dealt with the purchase as they will have their copy.
originally 3 years was common but local authorities have had the option to extend this so there is no set answer that would apply to all.
you will need to check if they allow further borrowing - not all do, but those that will, only allow for home improvements as it should increase the equity and therefore safeguard their "stake" in the property if they have to claw back the discount.
again, all the answers should be in the original legal pack
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there will definitely be a date in your legal contracts to confirm the date for the RTB clawback and their legal charge will most likely also be registered with land registry.
if you are unsure, cannot locate the documents etc contact the solicitor that dealt with the purchase as they will have their copy.
originally 3 years was common but local authorities have had the option to extend this so there is no set answer that would apply to all.
you will need to check if they allow further borrowing - not all do, but those that will, only allow for home improvements as it should increase the equity and therefore safeguard their "stake" in the property if they have to claw back the discount.
again, all the answers should be in the original legal pack
steve19720
answered 1 month ago
Thank you, that makes perfect sense. Luckily we do only want the additional funds for home improvements. Just need to hunt around now to fund a mortgage company that will help us :-)
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