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Mortgage Glossary
Right to Buy Mortgages
 
The original right to buy schemes were introduced in the twentieth century, when tenants living in local authority properties were allowed to buy them. This offers you the right to purchase your home at a rate discounted from the market value, with the condition that you had to be living there for at least two years.

Who are the people who can get the right to buy mortgage? The answer is tenants, who have been in the council property for at least two years. Once you fulfilled these criteria you can purchase the property under the market value. Almost any council tenant has his right to buy; all he has to do is to prove that he has a secure financial status, in order to obtain a mortgage. However there are a few exceptions like houses allocated for people with disabilities or elderly tenants. There is the sociological issue of this matter, regarding ethnical diversity, preventing the ghetto- style, offering stability, enforcing the feeling of community belongingness among those who have chosen to live longer in a certain neighborhood. The result of this right to buy scheme was a much stronger community, which reflected its positive influences around his environment.

In order to be able to exercise his right to buy, the tenant must prove that his eligible.

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Tenants, who are bankrupt, have a bankruptcy petition against them, or court order can not apply for this right.
You must keep in mind that mortgages are obtainable only for a period of up to twenty-five years, by paying an amount of money every month. This sum can be the interest rate or a certain rate towards the capital loan. Some mortgage providers can offer you possibilities of loan, in order to buy property, but these payments are less favorable for the tenant, who could not borrow money from a traditional building society, or high street bank.

There is an alternative solution in case you failed to obtain a long term mortgage, is to buy share of the property, pay share mortgage and rent to the landlord. When mortgage is impossible you can purchase share of properties. You must also consider other financial expenses, like: annual charge for the maintenance of the flat and public areas. If you own a house you are the only one responsible for the maintenance, so it is advisable to put aside money for critical or unpredictable situations which can appear at no time. The best way to deal with these situations is to have emergency funds, in case of repair, damage, disasters etc.

The process of buying has some important steps. You must start planning, and preparing because the process of acquisition can be very stressful and time consuming, including searching, following formality procedures, borrowing money, apply for a mortgage and purchasing the property. Firstly you must fill out an application form, be careful to the detailed information, because you are providing it to the landlord, who is going to decide whether you are eligible, and calculate the discount you will be entitled to obtain according to the property value. The landlord will answer to your demand and confirm if you have the right to purchase, and how much discount you are going to get. In twelve weeks the landlord gives you a notice with the following details.

A description of the place you chose to buy, the money you must pay on the property, the value of it, and the discount you received. The extra expenditure concerning maintenance, repair for over the next five years. Information about any damages, deficiencies the landlord knows about. And last but not least the attached terms and conditions. In case you disagree with the valuation carried out by the landlord, you can apply to the district valuation office, within three months the notice has been hand out and get a final decision from them.

Here are some tips for tenants that can be really helpful.
  • Do your homework, search for all the information you need, from deposit, to maintenance money, to neighborhood history, to insurances, taxes, valuation fees etc.

  • Make calculations regarding the amount of money you have to pay on mortgage.

  • Time is money, and as soon as you have sent the application form to the landlord, deadlines have to be respected, formalities have to be done, and this way there is no time on re-thinking everything.
Obey the rules, be honest and thorough the landlord will decide according the information you provide him. It is important for a smooth future cooperation to be sincere and trustful.