If you’re in the market for a new home, you’ve probably already discovered that buying property is expensive. Fortunately, there are ways to find homes at a lower price point, and ex-council houses are a popular choice.
Let’s explore why you should consider one.
Ex-council houses are former council homes that have now been sold to private buyers under the Government’s Right to Buy Scheme. You might be wondering why you should buy an ex-council house.
Here are some of the benefits:
- They’re generally more affordable than newer houses.
- They’re a good size with multiple bedrooms.
- Situated in areas close to useful infrastructure and amenities such as schools, transport links, and more.
That said, there are some things to consider before committing to buying an ex-council house. For instance, sometimes these homes can be in need of modernisation, so be sure to factor this into your budget. Also, getting a mortgage for an ex-council house can be tricky. That’s why we’ve created this handy guide to help you get your head around everything you need to know about how to get a mortgage for an ex-council house.
So, if you’re interested in buying a home that offers both affordability and an excellent location, an ex-council house might be the ideal choice for you. Just remember to research all the necessary details beforehand to ensure that the home is right for you.
Are mortgages available for ex-local authority houses and flats?
Ex-council homes can be a great opportunity for those looking for an affordable property in the UK. But, as with any home purchase, getting a mortgage can be a daunting task.
The good news is that mortgages are available. Phew!
Unfortunately, not all lenders offer mortgages for ex-council homes, resulting in extra hurdles that you’ll have to overcome.
You might be wondering, why is it so difficult to get a mortgage for these homes? Well, there are several reasons.
For starters, some ex-council homes are located in areas that are considered undesirable because of high crime rates or lack of local amenities. Additionally, if the property was recently a council home, there may be necessary repairs still required.
Moreover, non-standard construction types like concrete or steel-framed homes are typically considered harder to mortgage. Unfortunately, all of these factors can make ex-council homes harder to sell, causing many lenders to be more hesitant to offer mortgages.
But why do lenders care so much about the ease of selling the property?
After all, you’re the one taking all the risk by taking on a mortgage, right? Not exactly. Mortgage lenders and banks need to make sure they’re protected from the risks that come with borrowers failing to pay off their mortgages. This means lenders have to be able to sell the property without too much of a delay. With non-standard construction homes, this process becomes even harder.
Despite the difficulties, it’s still possible to obtain a mortgage for an ex-council home. By working with the right lender and taking the appropriate steps, you can still purchase the property of your dreams. So, don’t let the extra work deter you. Instead, be prepared, be persistent, and take the first step towards your new home.
What are non-standard construction homes?
Non-standard construction buildings are a fascinating subject to explore, and they form part of our architectural history.
These homes are made using materials or methods that are now considered unsafe or unlikely to stand the test of time. Examples of such materials include concrete, prefabricated houses, and houses with steel or timber frames. In addition, these houses are considered an extra risk to the mortgage lender in the event of repossession due to structural concerns and a potential drop in market value.
It’s worth noting that not all non-standard construction types are the same, which can make it difficult to predict the difficulty of getting a mortgage on these properties until a survey has been conducted.
Some have a vastly shorter or longer expected lifespan than others. This makes it all the more imperative to understand the different types of non-standard construction buildings.
Did you know that a lot of non-standard construction types were previously used to produce affordable homes during the housing crisis that followed World War II?
A lot of these affordable homes became council homes, which ultimately means that there is a higher chance of ex-council houses being non-standard construction type properties.
Council flats
Are you considering buying an ex-council flat and wondering if you’ll face obstacles in getting a mortgage? Well, there are actually several factors that might make securing a lender more challenging.
For starters, some mortgage companies prefer to offer mortgages for ex-council flats only if the majority of other flats in the building are privately owned.
Why is that, you ask? Well, lenders might have concerns over maintenance issues and find it harder to sell a flat that’s surrounded by council flats. This means that if you’re looking to buy a flat in a building that isn’t private majority-owned, you might need to look for a more accommodating mortgage lender.
Another aspect that might affect mortgage lenders’ decisions is the height of the building you plan to purchase a flat in. While low-rise blocks of flats might be simpler to mortgage, many lenders will refuse mortgages for ex-council flats that are higher than five or six storeys. Why? Because high-rise flats often come with higher maintenance costs. If these costs aren’t met, the flat’s value will decrease, reducing the worth of the lender’s security and increasing the risk of the loan.
Similarly, some mortgage lenders might be picky when it comes to studio flats, which are flats where the living area and kitchen area are combined. Lenders may refuse to offer a mortgage on this type of property, as it might be harder to resell and comes with an increased fire risk.
And, of course, we can’t forget the issue of cladding types – which has become much more critical post-Grenfell Tower. Many mortgage lenders will refuse mortgages on buildings with cladding that has not been approved by a professional surveyor, with some cladding types refused altogether.
Finally, some lenders might be hesitant to lend on properties with communal walkways, seeing it as a security risk. While this is less of an issue presently, it’s still worth keeping in mind when looking for a mortgage.
Ultimately, none of these issues would be a deal-breaker in themselves. However, when combined with other problems related to ex-council homes, they might combine to make it difficult to secure a mortgage lender. If you’re looking to buy a property that falls under these risk categories, you may well find that your mortgage options are very much limited.
What are the advantages and disadvantages?
Ex-council houses are a popular choice due to various advantages, but they often come with some challenges. When it comes to value for money, there are significant savings to be had with the Right to Buy policy, which allows council house residents to purchase their properties. Even if you’re buying an ex-council house from a private owner, it’s usually cheaper than other similar properties in the area.
Another perk of ex-council houses is the size and space they offer. Since these properties were typically built for families, they are often more spacious than other homes in the neighbourhood. Plus, most council houses have gardens or outdoor spaces, which can be attractive to buyers.
Of course, there are challenges to be considered too. For instance, getting a mortgage for an ex-council house can be a bit trickier than obtaining one for a privately owned house. However, a mortgage broker can help secure better deals.
Other drawbacks include location, maintenance and limited extension space. Ex-council homes are often situated in areas that were less expensive to build in, meaning they may not be in the most desirable neighbourhoods. And many council homes were constructed using cheaper methods, often resulting in high ongoing maintenance costs.
Living in an ex-council house can also carry a social stigma, and some may also feel that there is limited room to expand the property, which can limit its potential value.
In weighing up the pros and cons, it’s ultimately up to individual buyers to decide whether an ex-council house is the right fit for them. However, these popular homes are still widely valued, largely due to their affordability and practicality.
Getting a mortgage
Getting a mortgage for an ex-council home can be a bit trickier than for a regular property. However, with a bit of effort and some smart thinking, you can definitely secure a good deal.
One approach could be to look for a mortgage broker who specialises in ex-local authority homes. (We can help you with this).
You’ll be amazed at how much a specialist can help you!
Another tip that could make things easier is to keep an eye out for government-backed schemes that provide financial assistance to first-time buyers and those looking to move up the property ladder. Such programmes may open up additional funding opportunities that can help tip the scales in your favour.
So, with a bit of know-how and some creative thinking, securing a mortgage for an ex-council home can be quite manageable after all!
Mortgage criteria
It turns out the exact criteria can vary by lender, so if you’re looking for specifics, you should definitely speak with a whole of market mortgage broker. But no matter where you’re applying, there are some consistent standards you’ll need to meet.
To start with, you should have a high income-to-debt ratio, which will help you secure a higher loan amount to cover the cost of the property. And of course, your credit score is critical; it’ll help demonstrate your financial stability to the lender.
There are many different types of houses, but what if you’re interested in a more complex or high-risk property? If you’re looking for a non-standard construction option, for example, or another type that’s a bit riskier than the norm, be aware that mortgage lenders would want an even higher level of income from you.
Mortgage deposits
Due to the risks involved, lenders may require a larger-than-usual deposit amount.
Don’t worry though, most lenders will offer mortgages with as little as a 10% deposit, and some even allow a 5% deposit.
However, if your chosen home has additional problems, like those listed above, you may have to provide a higher deposit. For example, a flat of this type could require a deposit of 15% or higher.
But don’t let that deter you from getting your own home!
What about first time buyers?
If you’re a first-time buyer looking to secure a mortgage on an ex-council house or flat, you might be wondering if it’s going to be a tough ride. The good news is that you’ll not generally face too many difficulties, but it’s still worth knowing what to expect.
To begin with, it’s essential to understand that ex-council properties typically come with a lower price tag, making them extra attractive to first-time buyers. But, as with any property purchase, there are some things you need to keep in mind.
If you’re worried about whether you can get a mortgage, the best thing you can do is speak to a mortgage advisor. They’ll be able to guide you on the next steps and whether the property you’re interested in is viable. They can also arrange a mortgage agreement in principle (AIP), which is useful when talking to estate agents.
It’s also worth considering how you’ll manage the upkeep of the property once you move in. Some ex-council houses or flats require repair work, which can be costly. Nevertheless, getting a mortgage for an ex-council property is often considered a smart move and can be the first step onto the property ladder for many.
CONTACT A MORTGAGE BROKER
If you are ready to take the next step then we can put you in touch with a fully qualified independent mortgage broker.
Before you begin
Here are some things to consider before you make the leap.
Take a deep breath and read on to find out more!
Before applying for a mortgage, these are the top things you should consider. Take your time, put in the effort, and ensure that you do things right the first time around.
Check who owns the freehold
This is a crucial step when buying an ex-council property. Is the council still the freeholder of the land?
If so, you might have mandatory service charges to pay. Make sure you consider this alongside your monthly mortgage payments to ensure that you can afford to stay afloat. Although most freeholds are privately owned, it’s best to always check and be sure.
Get a survey
Before you buy any property, it’s always wise to get a surveyor’s assessment, especially if it’s an ex-council house. It’s also best to find a surveyor with experience in the particular type of property you’d like to buy, such as flats, non-standard construction units, or older houses.
This way, you identify maintenance risks and prepare accordingly. Your survey will help recognise the areas where you could improve the property when you take ownership.
Research the local area
Remember that the local area is equally important as the ex-council house itself. Poor market demand, fly-tipping, vandalism, and neglected upkeep of public areas are just some of the things to look out for.
It’s important to look at the statistics and amenities available in the local area. All of these factors could lower your property’s value after you buy it, which could put you at a disadvantage when you sell it down the line. However, if you never intend to leave the property, then this might be less of an issue for you.
How a mortgage broker can help
Are you worrying about finding a mortgage lender for an ex-council property? Fret not! A mortgage broker, with their experience and expertise, can guide you through the process with ease.
With a broker on your side, you won’t have to worry about meeting a lender’s requirements for an ex-council property. They will advise you on what issues the lender might have with the property you are buying and how to resolve them.
As lenders usually require detailed information about the property’s current condition, a broker can explain what a surveyor might look for and how to improve these areas, making selling easier in the future.
But that’s not all!
A mortgage broker can identify lenders willing to work with ex-council property mortgages and those with criteria more favourable to you and your property. They can also compare rates and get you the best deal out there, taking the stress off your shoulders when it comes to financing your new home.
Do you feel lost on how to put your application together? Your mortgage broker has your back! They can help you prepare your application, ensuring everything is in order, so you can focus on finding your dream home.
With a mortgage broker, you have a higher chance of mortgage approval. So, why not choose a mortgage broker for a worry-free buying process?
In summary
Ex-local authority properties can offer generous amounts of space at a fraction of the cost of traditional homes. However, before you take the plunge, there are some crucial factors you need to consider.
One key issue to bear in mind when buying ex-local authority houses is the non-standard construction of these buildings. Flats with common areas or studio-flat living areas, in particular, can be tricky to secure mortgages against due to the higher risk of prices plummeting, making it harder to resell them.
If you’re considering getting a mortgage for a property like this, it’s essential to use an experienced mortgage broker who knows the ins and outs of ex-council homes.
Regardless of the type of property you’re interested in or whether you’re using the Right to Buy scheme, Respect Mortgages can introduce you to an award winning mortgage broker who have expert brokers dealing with ex-council properties.
Not only do they have years of experience in helping buyers find specialist mortgages, but they work with over 100 lenders, so you have the maximum amount of choice.
To enquire, please click the button below or call us on 0330 030 5050.
