What Is Different About a Right to Buy Mortgage?

If you’re looking to buy your council home in the UK, you’ve probably come across the term Right to Buy mortgage. But what exactly is it, and how does it differ from a standard mortgage?

Right to Buy mortgages are designed specifically for council tenants who want to purchase their home at a discount through the government’s Right to Buy scheme. While they share some similarities with regular mortgages, there are key differences you need to know before applying.

1. You Need a Right to Buy Offer from the Council

Unlike a standard mortgage where you can buy any property on the market, a Right to Buy mortgage is only for tenants purchasing the home they already live in. Before you apply for a mortgage, your local council or housing association must first confirm your eligibility and provide a Right to Buy offer. This offer will tell you:

• The market value of the property
• The discount you’re entitled to
• The final purchase price after the discount

Without this offer, you cannot apply for a Right to Buy mortgage.

2. You Might Not Need a Deposit

One of the biggest advantages of a Right to Buy mortgage is that many lenders allow you to buy your home without needing a deposit. This is because the discount you receive acts as equity, meaning the lender may be willing to finance the full purchase price.
For example:

• If your home is valued at £150,000 and you qualify for a £50,000 discount, the purchase price is £100,000.
• Some lenders will treat the £50,000 discount as a deposit, so you may not need to put down any extra cash.

However, not all lenders accept this, so it’s important to compare mortgage options.

3. Limited Lender Choices

Right to Buy mortgages are not offered by every bank or lender. Since they are a specialist type of mortgage, your options may be more limited compared to a standard mortgage. Some high-street banks offer them, but many applicants choose specialist mortgage lenders or brokers who have experience with Right to Buy.
A broker can help you find a lender that accepts your circumstances, especially if you have bad credit or are self-employed.

4. You Need to Be a Secure Tenant

Not everyone living in a council property qualifies for Right to Buy. You must be a secure tenant, meaning:

• You have been renting your home from the council or a housing association for at least three years.
• The property is your main home.
• The home is not sheltered housing or adapted for elderly/disabled residents (these are usually excluded).

If you’re unsure, your local council can confirm your eligibility.

5. Restrictions on Selling Your Home

With a standard mortgage, you can usually sell your home whenever you like. However, with a Right to Buy property, there are selling restrictions to be aware of:

• If you sell within 5 years, you may have to repay some or all of the discount. The amount depends on how soon you sell.
• If you want to sell within the first 10 years, you must first offer the property back to the local council or a housing association before selling it on the open market.

These rules are designed to prevent people from making a quick profit and ensure council homes remain available for long-term residents.

6. Affordability Checks Still Apply

Even though you get a discount, lenders will still check that you can afford the mortgage payments. They will assess:

• Your income and employment status
• Your credit history
• Any existing debts or financial commitments

If you have bad credit, you may still get a Right to Buy mortgage, but you might need a specialist lender or pay a higher interest rate.

A Right to Buy mortgage can be a fantastic way for council tenants to get on the property ladder with a big discount. The main differences from a standard mortgage are:

• No deposit required (in many cases)
• You must be a council tenant buying your home
• Limited mortgage lender options
• Restrictions on selling your home

If you’re considering applying, it’s a good idea to speak to a mortgage broker who specialises in Right to Buy to find the best deal for your situation.

Thinking of buying your council home? Start by checking your eligibility and speaking to a lender who understands Right to Buy mortgages.

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