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Right to Buy Mortgages

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Every person dreams of owning a home. If you are staying as a tenant, you may be planning on buying a home in the future. Today, the government allows you to buy the house where you have been staying on rent. This is called the ‘right to buy’. This scheme was first introduced in 1980. You can buy the property from the local authority or the housing association. The mortgages that have been designed for this purpose are called ‘right to buy mortgages’. These mortgages are cheaper than the traditional mortgages since you can easily get a discount on the loan.

Earlier, very few lenders offered the right to buy mortgages. Though the number of lenders who provide this type of mortgage has increased, it is still a specialized product. After residing in a house for 2 years, you can get a minimum discount of 32% on the market value of your house and 1% more for each consecutive year of residence, with the maximum up to 60%. For flats, the minimum discount is 44% of their market value and the maximum is 70% with a discount of 2% for each year of stay.

To be eligible for the right to buy mortgage, you should be:

 A legal tenant of the of the property that you want to buy
 A tenant of a landlord of a right to buy property for minimum 2 years

The discount you can get depends on the duration of your stay in the present property and the type of property. The mortgage costs are lesser than the rental costs.

In recent years, certain unscrupulous lenders have floated erroneous information, claiming that the government proposes to scrap the scheme. If you ever get such kind of misleading information, take the copy of the advertisement and lodge a complaint with the local trading standards authority. If you have been forced into taking such a mortgage when the lender made false claims, get legal advice as soon as possible.

However, before opting for a right to buy mortgage, consult a financial broker.