A family member (or someone else) could provide the funding for the purchase, according to the Department for Communities and Local Government.
However legal ownership of the property can only be in the names of the eligible tenant/s and other eligible applicants. As a result, the Department for Communities and Local Government recommend that candidates get financial and legal advice on mortgages.
A number of lenders will look at various Right to Buy mortgage offerings with some national and some regional.
Dale Jannels, managing director of Atom, says some will offer 100 per cent of the discounted purchase price while others will require the customer to put in a small deposit, say 5 per cent. A few will even consider potential purchasers who might have had a financial issue in the past.
In terms of the application process, firstly Mr Jannels says the tenant must approach their council to ensure eligibility. Timescales depend on the local council, but Mr Jannels says usually the customer has 12 weeks from confirmation of eligibility to take up the offer of a Right to Buy.
Mr Jannels says: “They should speak to a professional adviser who can source the most appropriate mortgage for their needs.”
Peter Dockar, head of mortgages at HSBC, says Right to Buy mortgages at his lender follow the same approval process as all other mortgages.
Mr Dockar says customers are required to provide their Section 125 notice, which confirms the details of the purchase price and any other conditions of their Right to Buy.
Kathy Bowes, business development manager of The Cambridge Building Society, says her lender offers 100 per cent of the discounted Right to Buy price, subject to the loan not exceeding 80 per cent of the full value.
She says the building society has an eligible property requirement of the home being within a 30-mile radius of Cambridge. Flats can be considered provided they are no more than three storeys high, she adds.
She says: “We require a copy of the right to buy papers and the mortgage must be in the names of those eligible for the purchase. A standard application form is then completed.
“When considering the level of borrowing suitable for applicants we utilise an income and expenditure formula to ensure affordability.
“We will take into account the applicants’ net monthly income and their monthly expenditure, this includes the proposed mortgage payment which will be ‘stressed’ to ensure we take account of potential future interest rate changes.
“Our underwriters will expect their outgoings to be a fair and true reflection of the costs associated with running a home and maintaining a reasonable lifestyle.”
