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A Guide To Council House Mortgages
Most people who are going to buy their home will need a mortgage, which is a particular type of loan. There are various kinds of mortgages available from banks and building societies, so it always important to make sure you get the right mortgage deal for you. Mortgages are generally available for a period of up to 25 years or sometimes longer, whereby the mortgage holder will pay a monthly amount that covers either the interest on the loan only, or a larger amount that pays off both the interest and a certain amount towards the capital of the loan. When you contact your local council or landlord about your interest in the Right To Buy scheme, they will inform you of the Open Market Value (OMV) of your property. The OMV is the full value of your house: i.e. the amount you would expect to pay for that property normally. They will also let you what discount you are eligible for. From this you can work out the Right To Buy (RTB) value of your property – in other words, the amount you’ll actually pay. The amount you need to borrow for your Council House Mortgage will depend on the Open Market Value of your property minus any discount you are eligible for minus any cash you may be able to put towards the purchase (known as a deposit). There are lots of Right To Buy lenders who will provide a mortgage enabling you to buy your council house. Most will lend up to 95%, whilst others will lend the full 100% of the Right To Buy price. Some specialist mortgage lenders will allow you to borrow up to 85% of the OMV of your house. So you may be able to borrow more money than you need to buy your house. Here’s an example: say your house is valued at £100,000, and you’re entitled to a 25% discount from the council. Open Market Value = £100,000 Discount = 25% or £25,000 Right To Buy (RTB) Price = £100,000 - £25,000 = £75,000 Some lenders will offer you up to 100% of the RTB price, in this case: 100% of £75,000 = a maximum mortgage of £75,000 But some specialist lenders will offer you 85% of the OMV, in this case: 85% of £100,000 = a maximum mortgage of £85,000 As you can see, you could get an extra £10,000 by choosing a specialist Council House Mortgage company. You then have the opportunity to use this extra money to improve your new home by fitting double glazing, central heating or even a new kitchen. Taking out a Council House Mortgage is a big step, so it is well worth taking time and looking around to find the best mortgage lender and mortgage deal to suit you. Article Directory: http://www.articledashboard.com The author has written several times on the subjects of Council House Mortgage and the Right To Buy Scheme. Visit the website at www.buyyourcouncilhome.co.uk/rtb/council-house-mortgage |
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