Deposit On A Right To Buy Property

[soulvapour 10]

Sorry if this has been asked but I'm asking if you have to still pay the 10% deposit on a mortgage you get to buy a council house?

I will be a first time buyer, and got offered my home for £40,000 when I've been on mortgage websites it asks to put in a minimum of 10% deposit. With the house been so cheap I didn't think I'd have to pay that.

Anyone bought from council? 

Thanks 

Edited January 17, 2021 by nikki-red

[nikki-red 307]

I bought mine in August. The discount counts as your deposit.

 

[soulvapour 10]

Ok thank you 😊

[topflat29 10]

On 17/01/2021 at 19:25, soulvapour said:

Sorry if this has been asked but I'm asking if you have to still pay the 10% deposit on a mortgage you get to buy a council house?

I will be a first time buyer, and got offered my home for £40,000 when I've been on mortgage websites it asks to put in a minimum of 10% deposit. With the house been so cheap I didn't think I'd have to pay that.

Anyone bought from council? 

Thanks 

When you take out a mortgage to buy a property,  you have to study the rules of the mortgage company.       The Council does not offer  the  mortgage loan.

The mortgage lender will expect you to put up 10% - 20% deposit  and they will lend you  the other 80%-90%.

10% deposit is usually  reserved   for first time buyers but the interest rate charged on the loan  is higher and you may be required to pay admin fee  say £499 .

[Jeffrey Shaw 90]

On 17/01/2021 at 11:25, soulvapour said:

Sorry if this has been asked but I'm asking if you have to still pay the 10% deposit on a mortgage you get to buy a council house?

I will be a first time buyer, and got offered my home for £40,000 when I've been on mortgage websites it asks to put in a minimum of 10% deposit. With the house been so cheap I didn't think I'd have to pay that.

Anyone bought from council? 

Thanks 

There's no deposit, because there's no contract for sale/purchase.

 

If the net purchase price is £40 000, much depends on Loan-To-Value ratio set by your chosen mortgagee (lender).

Perhaps its LTV is limited to 90% and it's unwiling to lend more than that.

Best to ask it if the 90% figure applies to RTB purchases.

[Jeffrey Shaw 90]

Clarification: 'value' (in 'LTV') usually means 'purchase price' or valuer's view of what the property's worth.

But an RTB purchase involves a statutory discount off the open-market value.

The mortgagee (lender) may contemplate a 100% mortgage advance if confident that the mortgagor won't default during the first year- after which a percentage of the discount ceases to be recoverable on early sale.