How to buy your freehold
Find out more
Ex-local authority mortgage comparisons are provided by Koodoo.[1]
Buying an ex-local authority home can be a great way to get on the property ladder and access central postcodes that might normally be out of your financial reach.
They’re usually much cheaper than other similar-sized properties, and often very spacious as they were designed for family living - plus, council homes were generally built to last.
Yet there are other implications you should consider, including the state of the property, the surrounding area and what’s possible when it comes to financing your house purchase.
It’s possible to get a mortgage for an ex-council home - although it can be trickier than taking one out for a standard home.
Some lenders are reluctant to lend on certain types of council property or ones containing particular materials, like high-rise buildings and properties with cladding.
What’s more, ex-local authority properties in general can be more challenging to sell than private homes.
Risks like these can make lenders more cautious, which means you may have fewer mortgage options to choose from.
If you’re considering buying an ex-local authority property, there are a few steps you should take:
Find out whether the local council is still the freeholder. If so, you should look into the annual service and maintenance charges to gauge what you’ll need to pay
These are essential renovations that need to be made to the property which will cost any individual leaseholder more than £250
Speak to a specialist adviser with experience in dealing with ex-council homes. They’ll match you with lenders that offer ex-council home mortgages and help you find the best rates
Compare mortgage deals and select the lender and rates you’re most happy with, then work with your mortgage broker to submit your application. You’ll need to let them know about your income and outgoings, any deposit you have and your credit score
The lender will do their own valuation report to check the property is worth the amount you want to borrow. But you should also have your own independent survey done to check the condition of your property and highlight any hidden repairs that might be needed
Typically, most council homes available to buy will be flats and maisonettes, followed by houses and bungalows.
Many council homes were built in the 1950s and ‘60s and were made of concrete or prefabricated.
Some of these homes were made with certain types of concrete which mortgage providers aren’t prepared to lend on - so it’s worth doing some research about the construction of the property you’re interested in buying.
When lenders and surveyors are considering your property and mortgage application, there are several things they’ll be looking at, which includes:
The safety of the local area and the appeal to prospective buyers is considered
Lenders sometimes prefer a certain percentage of the units in a local authority block to have private owners.
Some concrete council homes built in the past encountered structural problems so lenders will want to investigate this
Lenders will want reassurance your property is valuable enough to secure your loan against
If the council property you want to buy is a flat there are some extra factors that mortgage lenders will consider:
Your ability to get a mortgage will depend on a number of things including the amount you need to borrow, along with:
This is the amount you can put down as a lump sum
Lenders typically want to see stable employment and will offer a multiple of your income for the amount you can borrow
Your lender will look at how your spending, including bills and everyday living expenses, affects your overall disposable income
Any existing debt you have like credit cards and overdrafts will be taken into account
Most lenders have a minimum age of 18 and a maximum age of 75
Some lenders will put a lower maximum loan-to-value (LTV) on ex-council houses because they’re seen as non-standard and more of a risk.
A lower LTV is a way of protecting the lender from the property potentially dropping in value.
As a buyer, this means you may have to pay a higher deposit than you might expect for an ex-council home mortgage.
For example, the lender might have a maximum LTV of 90% on standard houses, but only 85% on ex-local authority houses.
This means if you were buying a home worth £100,000, you’d need a £10,000 deposit for a standard home, but a £15,000 deposit for an ex-council property.
Find out more
Find out more
Find out more
Find out more
Find out more
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME OR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
PLEASE NOTE: THE FCA DOES NOT REGULATE MOST BUY TO LET MORTGAGES
[1]For online mortgage comparison and advice Gocompare.com introduces customers to Koodoo which is the trading name of Mortgage Power Limited who are authorised and regulated by the Financial Conduct Authority (FRN 845978). Gocompare.com’s relationship with Koodoo is limited to that of a business partnership, no common ownership or control exists between us. Please note, we cannot be held responsible for the content of external websites and by using the links stated to access these separate websites you will be subject to the terms of use applying to those sites.