Right to Buy Mortgage for First-Time Buyer with Completion Deadline

The Client: Looking to purchase their first home, our client held a senior full-time job in the construction industry.  

The Property: A three-bedroom terraced council house in South East London. Our client had lived there for many years, and the area was convenient for their work and enjoying central London. 

The Finance: Having rented the property from the local council for several years, our client now had the opportunity to purchase the property for themselves. They had saved up a solid deposit, and with the Right to Buy discount, only required a 63% LTV mortgage against the property’s market value. 

The Challenge: The primary challenge with this case was that our client required a lender that would accept a right to buy mortgage application. Not all lenders accept ex-council properties or have minimum requirements around how many in the same area are privately owned, so finding the right lender can be tricky. Right to buy purchases are also a little more complex, as while tenants can purchase the property at a discounted price, they require a mortgage calculated using the full market price.  

As a single-income household, affordability calculations would be difficult, especially amidst rising mortgage interest rates. We’d need to carefully compare the different options lenders offer to find the most suitable for our client. 

Additionally, the council our client was purchasing the property from had put a deadline on the transaction, which meant finding a lender that could meet the time requirements! Given the struggles mortgage lenders faced this year with rapidly increasing rates and increased caseloads, we were experiencing much longer processing times than is considered standard. 

The Solution: Following some research to source lenders that could accommodate the right to buy application and ex-local authority property, we compared interest rates, affordability and service times. Having found a mortgage that would work for our client, we spoke directly to the lender to ensure they could meet the completion deadline set by the council. Confident that they could, we proceeded with the application. With help from our client relationship management team, the case proceeded smoothly to completion within the required deadline. Here are the details: 

Property Details

Property market value: £325,000 

Property value (right to buy discount): £212,500 

Loan amount: £205,500 

LTV: 63% 

Rate: 3.38%, five-year fixed 

Term: 19 Years, capital and interest repayment 

Mortgage payment:  £1,228.66 per calendar month 

Lender arrangement fee: £999 (added to loan) 

4th January 2023