The dream of homeownership can become a reality for many UK residents through the Right to Buy scheme, which offers council tenants the chance to purchase their homes at a discounted price. However, if your income is £210 per week or roughly £10,920 per year, you may wonder if you can secure a mortgage. While it may present challenges, it’s not impossible. Here’s a detailed look at how to approach this opportunity and the factors that can impact your chances.
Understanding the Right to Buy Scheme
The Right to Buy scheme allows eligible council tenants to purchase their homes at a discount based on how long they’ve lived there. For instance:
- Discounts can vary depending on your tenancy duration and whether your home is a house or flat.
- As of late 2024, the maximum discounts range from £16,000 to £38,000, depending on your location.
These discounts are significant as they effectively reduce the purchase price of your property, acting as a built-in deposit.
For example, if your property is valued at £100,000 and you’re eligible for a £16,000 discount, the purchase price would be reduced to £84,000.
Mortgage Affordability: What Can You Borrow on £210 Per Week?
Lenders calculate how much you can borrow based on your income, typically using an income multiple of 3 to 6 times your annual salary. On an annual income of £10,920, this translates to:
- Low-end estimate: £10,920 x 3 = £32,760
- High-end estimate: £10,920 x 6 = £65,520
These figures represent the potential loan amount, but affordability assessments also take into account factors like:
- Existing debt or credit commitments
- Household outgoings (e.g., rent, utility bills, childcare)
- Credit score
If your loan eligibility doesn’t cover the full purchase price after applying your Right to Buy discount, you may need to consider other funding sources or joint applications.
Maximising Your Options
If your income alone isn’t sufficient for the mortgage amount required, there are steps you can take to enhance your borrowing potential:
1. Joint Applications
You can apply jointly with:
- A spouse or civil partner
- Up to three family members who have lived with you in the property for at least 12 months
Combining incomes increases your total household earnings and can significantly boost your mortgage eligibility. For example, if your combined household income rises to £20,000, your potential borrowing limit could increase to £60,000–£120,000, depending on the lender.
2. Specialised Lenders
Some lenders specialise in Right to Buy mortgages and may offer more flexibility for applicants with lower incomes. Working with a mortgage broker can help identify these lenders.
3. Exploring Government Support
Consider other government-backed schemes if affordability remains an issue, such as:
- Shared Ownership: Buy a share of the property and pay rent on the rest.
- First Homes Scheme: Offers discounts to first-time buyers, potentially reducing the cost of your new home.
4. Budgeting and Saving
If the mortgage amount is still slightly out of reach, creating a savings plan to cover the shortfall or unexpected costs can help.
5. Costs to Consider as a Homeowner
While securing a mortgage is an essential first step, becoming a homeowner also brings new responsibilities. Ensure you account for ongoing expenses, including:
- Mortgage repayments: These should comfortably fit within your monthly budget.
- Maintenance costs: Repairs and upgrades will now be your responsibility.
- Insurance and utilities: Home insurance, council tax, and utility bills will need to be factored in.
Is a Right to Buy Mortgage Possible on £210 Per week?
Although your income may limit the amount you can borrow, the Right to Buy scheme offers a unique advantage with its discounts, which effectively reduce the loan amount required. By exploring joint applications, consulting a mortgage broker, and leveraging government support, you can improve your chances of securing a mortgage.
Purchasing your council home on £210 per week might be challenging, but with careful planning, the right advice, and a clear understanding of your financial situation, it’s an achievable goal.
FAQs
Can I get a mortgage on £210 per week?
Securing a mortgage on an income of £210 per week (approximately £10,920 annually) can be challenging. Lenders typically offer mortgages based on income multiples (3 to 6 times your salary). This means you could potentially borrow between £32,760 and £65,520. However, lenders also consider factors such as your outgoings, credit score, and existing debts.
Does the Right to Buy discount count as a deposit?
Yes, in most cases, the Right to Buy discount can be used as a deposit. This reduces the total amount you need to borrow, which can make it easier to secure a mortgage even with a lower income.
Can I apply for a Right to Buy mortgage with someone else?
Yes, you can apply for a mortgage jointly with a spouse, civil partner, or up to three family members who have lived with you in the property for at least 12 months. Combining incomes can increase your borrowing capacity and improve your chances of securing a mortgage.
Are there lenders that specialise in Right to Buy mortgages?
Yes, some lenders specifically offer products tailored to the Right to Buy scheme. These lenders may have more flexible criteria, especially for those with lower incomes. Consulting a mortgage broker can help you find these specialised options.
What are the maximum discounts available under the Right to Buy scheme?
As of late 2024, the maximum discount varies by location and property type. In some areas, discounts range from £16,000 to £38,000. These discounts significantly lower the purchase price of your home.
How do lenders calculate affordability for a mortgage?
Lenders consider multiple factors to determine affordability, including:
- Credit history and credit score
- Your annual income and employment status
- Monthly expenses and existing financial commitments
They also assess whether your monthly mortgage payments will be sustainable based on your current financial situation.
What happens if my income isn’t enough for the full mortgage amount?
If your income alone doesn’t qualify you for the required mortgage, you can:
- Save to cover the shortfall between the loan amount and the purchase price
- Apply with a co-borrower (e.g., spouse or family member)
- Seek lenders who specialise in Right to Buy mortgages
Can I buy my council house with bad credit?
It is possible to secure a Right to Buy mortgage with bad credit, but it may be more difficult. Some lenders are willing to work with borrowers with poor credit, though you might face higher interest rates or stricter terms. A mortgage broker can help identify lenders suited to your situation.
Are there additional costs after purchasing a council home?
Yes, becoming a homeowner means you’ll need to budget for additional expenses, including:
- Mortgage repayments
- Property maintenance and repairs
- Home insurance
- Council tax and utility bills
Can I sell my home after buying it through Right to Buy?
Yes, but there are restrictions. If you sell the home within five years of purchase, you may need to repay some or all of the discount you received. The repayment amount decreases on a sliding scale depending on how long you’ve owned the property.
Do all council tenants qualify for the Right to Buy scheme?
Not all tenants are eligible. You must have been a public sector tenant for at least three years, and the property must be your only or main home. Some properties, such as those adapted for elderly or disabled residents, may be excluded.
Can I use other government schemes alongside Right to Buy?
Generally, the Right to Buy scheme is separate from other initiatives like Shared Ownership or the First Homes scheme. However, these options can be explored if you’re unable to afford the purchase under Right to Buy.
Is it better to rent or buy through Right to Buy on a low income?
This depends on your long-term financial goals and stability. While owning your home can build equity and eliminate rent payments in the future, you must consider whether you can afford the ongoing costs of homeownership, such as maintenance and repairs.
How can I improve my chances of getting a Right to Buy mortgage?
To improve your chances:
- Work with a mortgage broker for tailored advice and lender recommendations
- Save to cover potential shortfalls
- Improve your credit score by reducing debts and ensuring timely payments
- Explore joint applications to combine incomes
Continue Reading