Can I buy my council home with my kids?

Published by David Hollingworth on 02 October 2018.
Last updated on 02 October 2018

Q

Can I get a mortgage on a Right to Buy council property? I get the maximum discount on our three-bedroom semi-detached rural property in East Devon. If I can get a mortgage, can I apply with my two children? They are aged 27 and 23, and both live at home. One works part-time and the other is self-employed. I’m 62 and on disability benefits and my wife is my carer. I receive a very small pension and the rest of my income comes from my disability and mobility allowances.

From:
VK/Devon

A

Right to Buy allows council tenants to buy their home with the help of a discount on the purchase price. Anyone who has been a tenant for at least three years may be eligible and the discount can be as much as 70% off the open market value, subject to maximum limits (currently £80,900 outside London). The exact discount will depend on how long you’ve been a tenant.

It sounds like you’ve already investigated your eligibility for the Right to Buy discount with your landlord. It’s possible for a tenant to remain eligible for the discount and buy jointly with up to three family members, as long as they have lived in the property for the past 12 months. The fact that your children are living at home should, therefore, enable them to buy jointly with you.

There is a good range of mortgage lenders that will lend on Right to Buy and can offer as much as 100% of the discounted purchase price, so you don’t necessarily need an additional deposit. Like with any mortgage, the lender will need to ensure you can afford the mortgage so will look at income along with ongoing commitments and outgoings.

It will be important to look at the income level for all applicants and the breakdown of that income in order to understand how much you can afford to borrow. Benefit income, or a proportion of it, may be acceptable for mortgage purposes but that can vary between lenders, so it’s important to present it accurately and to have all your documentation in place.

Many, although not all, lenders will allow up to four borrowers to be named on the mortgage. That should allow for all of you to buy together and be named jointly on the mortgage. However, lenders may not take all four incomes into account and only work off the biggest two. Some lenders will have flexibility to use the income of more than two applicants, but it makes sense to seek advice on how the numbers stack up.

Another factor that may have a bearing on the mortgage will be the maximum age that lenders impose at the end of the mortgage. Some lenders will limit the term to a maximum age, often 70 or 75, which could shorten the length of the mortgage. The shorter the mortgage term, the higher the monthly payments on a repayment mortgage will be. However, some lenders are more flexible than others and can lend to a higher maximum age, so it is important to shop around.

This article was written in response to a reader’s question. If you have a financial or work/career question that has left you scratching your head ask our panel of experts who will aim to shine some light on the matter.

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