Financial Considerations

How much will it cost?

If you qualify for Right to Buy, your property will be valued at the price it would attract if sold on the open market. Your discount will then be deducted based on the length you have held your tenancy, up to a maximum set by the government for the area you live in.
Currently this is:

• House – 70% of the value or £80,900, whichever is lower
• Flat – 70% of the value or £80,900, whichever is lower

If you qualify for Right to Acquire this discount is again set by the government and is currently at £9,000 for the North East Derbyshire District.

We will send you a formal Offer Notice explaining the price you will have to pay and how it was calculated.

How do I arrange to borrow the money?

We do not assist with arranging finance – you should borrow from a Building Society or Bank.  If you decide to take out a mortgage you should:

• Seek independent legal advice from a reputable Financial Advisor such as your Bank or Building Society who is registered with the Financial Services Authority
• Make sure you can afford it – take into account all the additional costs associated with owning your own home
• Shop around for the best interest rate and add up all the fees and charges
• Beware of companies offering to help you through the Right to Buy process with cheap mortgages or special offers, they can have hidden charges.

Non-Traditional Construction

Many Council homes are of non traditional construction, for example, some are made from pre-cast concrete or steel frames.  Some types of non traditional properties have been classed as defective and may need substantial repairs in the future.  Some Banks and Building Societies may not lend on this type of property.  If you decided to sell the property in the future, your purchaser may also find it difficult to find a loan.

Benefits

As a tenant you may receive help towards your rent but as an owner-occupier you will not receive help towards your mortgage payments, except towards interest on the mortgage in certain circumstances.

You may wish to take out insurance to protect your mortgage.  Water and sewerage charges currently collected with your rent, would have to be paid directly to your water company.

The Council is occasionally asked to repurchase former Council houses if problems arise but this is only done under very rare circumstances.

Other Costs

Mortgage payments may appear to be cheaper than your rent but you will have to meet other costs, both in purchasing your property and maintaining it afterwards:

• Your home may increase in value or it may go down
• Fixed rate mortgages ensure your payments remain the same but a variable rate mortgage can see payments increase by a large amount if the interest rate rises
• You will be responsible for your own Solicitor and Surveyor costs, any fees from your lender and Stamp Duty if payable
• Once the purchase is complete, you will have to budget for ongoing mortgage or loan costs, buildings and other insurance, Council Tax, utility bills and all maintenance, repair and improvement costs to the property
• You will have to repay your discount if you sell the property within five years of purchase.

You should remember that if you do not keep up with your loan repayments, your home may be repossessed.

Purchasing a Flat

If you are purchasing a flat, the Council will still be responsible for maintaining the building but as a leaseholder, you will have to pay a proportion of the cost (called Service Charges).  Visit our Leaseholder section for further information.

Contact the Home Ownership Team