Remortgaging a home you bought under Right to Buy is often possible with adverse credit, and lenders weigh the same things as for any remortgage: how recent and serious the credit problems are, your equity, your income and your mortgage record. Two points are specific to Right to Buy. If you are still within the discount repayment period, your former landlord may hold a charge on your home and may need to agree to the new mortgage. And some lenders may look more closely at certain ex-local-authority property types. Nothing here guarantees an outcome.
This page explains how the discount rules sit alongside a remortgage, which properties can narrow the choice of lenders, and how bad credit fits in. The rules described are for England. Right to Buy has different rules in Wales, Scotland and Northern Ireland, and it has ended in Scotland and Wales.
On this page
In short
- In England, selling within the period in your agreement (commonly 5 years) can mean repaying some or all of the discount.
- A like-for-like remortgage is not a sale, but your former landlord may hold a charge and may need to agree.
- Some lenders may be more cautious about certain ex-council flats and homes of non-standard construction.
- Bad credit is weighed as with any remortgage: its age and severity, your equity and your affordability.
Your home may be repossessed if you do not keep up repayments on your mortgage. Think carefully before securing other debts against your home. Borrowing over a longer term can mean paying back more in total.
Does remortgaging mean paying back your Right to Buy discount?
In England, repaying the discount is triggered by selling or otherwise disposing of the home within the period set in your agreement, commonly 5 years from when you bought it. A like-for-like remortgage is not a sale, so on its own it does not usually mean repaying the discount. Check your own agreement, though, because the terms in your paperwork are the ones that apply to you, and national rules can change.
| When you sell | Share of the discount you may have to repay |
|---|---|
| Within the first year | All of it |
| In the second year | 80% |
| In the third year | 60% |
| In the fourth year | 40% |
| In the fifth year | 20% |
| After 5 years | None under these rules |
Taken from the GOV.UK guidance on selling a Right to Buy home in England at the time of writing. The amount is worked out on the home’s value when you sell, not what you paid. Your own agreement sets the terms that apply to you.
A separate rule matters if selling is one of the options you are weighing up. If you sell within 10 years of buying, GOV.UK says you must first offer the home to your old landlord or another social landlord in the area.
Will your council or housing association need to agree?
While the discount repayment period is running, your former landlord usually has a legal charge on your home so it can recover the discount if you sell. A new lender will normally want its mortgage to rank first, so your solicitor may need the landlord’s agreement, often by postponing its charge, before the remortgage can complete.
Landlords handle this in their own way and in their own time. A straightforward switch may raise few questions, while borrowing extra can lead to more about what the money is for. Build this into your timescale, especially if your current deal is close to ending.
What to check in your paperwork before you apply
- The date your Right to Buy purchase completed
- The discount repayment period and how the amount is worked out
- Whether your former landlord has a charge registered against your home
- Any right of first refusal if you sell within 10 years
- For flats, the lease length, service charges and any planned major works
How do lenders view ex-council homes?
To most lenders a former council house is simply a house, and many are remortgaged with no questions about the property itself. Some lenders may be more cautious about certain types, though, and the valuation report will flag anything that matters.
- Some flats and maisonettes, particularly in larger blocks, may be viewed differently by some lenders.
- Homes of non-standard construction may be acceptable to fewer lenders, depending on the type and any repair work carried out.
- Leasehold flats come with a lease, service charges and sometimes large bills for major works from the freeholder.
- Local demand can affect the valuation, which in turn sets your loan to value.
Flats are usually sold on a long lease, with the council or housing association keeping the freehold. Lenders look at the remaining lease term and the charges you pay, and our guide to remortgaging a leasehold flat explains why.
How does bad credit affect a Right to Buy remortgage?
Adverse credit is assessed in the same way whether or not your home was bought under Right to Buy. Lenders look at what is on your file, how recent it is, whether it has been paid or settled, and what has happened since. Our pages on remortgaging with a CCJ, defaults and mortgage arrears explain how each is usually weighed.
Where Right to Buy can make a difference is equity. Because the purchase price was discounted, some owners have a smaller mortgage compared with the home’s value, which means a lower loan to value (LTV). A lower LTV generally widens options with bad credit, although affordability and recent problems still count. Our guide to how LTV affects a bad credit remortgage explains the bands lenders use.
Your mortgage record since you bought
Many Right to Buy owners have been paying their mortgage for years. A steady record of on-time payments can help show that older credit problems are behind you, while recent missed mortgage payments are usually weighed more heavily than problems with other debts.
Can you remortgage a Right to Buy home to raise money or clear debts?
People borrow more against a former council home for all sorts of reasons, from home improvements to helping family or paying off other debts. If you are still within the discount period, check with your former landlord first, because extra borrowing may need its agreement. Our page on releasing equity with bad credit covers how lenders assess extra borrowing.
If you use a remortgage to pay off other debts, they become secured on your home, and your home may be repossessed if you do not keep up repayments. Spreading debts over a longer term can also mean paying more in total. Read about debt consolidation remortgages before deciding.
If you might sell in the next few years instead, weigh up any discount you would have to repay and the early repayment charges on a new deal before you commit to a remortgage.
What if a remortgage is not possible?
Moving to a new lender is not the only route. Depending on your circumstances, these may be worth comparing:
- A product transfer with your current lender, which may not need a full affordability assessment if you are not borrowing more
- A further advance from your current lender, if you need to borrow more
- A second charge mortgage, which leaves your existing deal in place
- Waiting until older credit problems are further behind you, or the discount period has ended
- Free debt advice from StepChange, National Debtline or MoneyHelper if repayments are a struggle
What may affect a Right to Buy remortgage with bad credit
| Factor | Why it matters |
|---|---|
| Time since your purchase | Within the discount repayment period, your former landlord’s charge and agreement may need to be dealt with. |
| Your former landlord’s charge | A charge for the discount may need to be postponed so the new lender’s mortgage can rank first. |
| Property type and construction | Some lenders may be more cautious about certain flats or homes of non-standard construction. |
| Lease terms for flats | The remaining lease, service charges and planned major works can all shape a lender’s view. |
| Type and age of credit issues | Recent or unpaid problems usually narrow options more than older, settled ones. |
| Mortgage payment history | On-time payments since you bought can help. Recent mortgage arrears usually weigh most. |
| Equity and loan to value | A current valuation sets your LTV, and a lower LTV generally widens options. |
| Purpose of the borrowing | A like-for-like switch is usually simpler than raising money, especially within the discount period. |
| Income and affordability | Lenders check your income and commitments and stress test the new payment. |
| Plans to sell | Selling soon could mean repaying the discount as well as early repayment charges on a new deal. |
These are general points, not lender rules. Each lender sets and changes its own criteria.
Information an adviser may ask for
You don’t need all of this to make an enquiry. It helps to know where to find it, because an adviser is likely to ask about most of it.
- Your Right to Buy completion date and a copy of your purchase paperwork
- The discount you received and the repayment terms in your agreement
- Details of any charge your former landlord holds, and who to contact there
- For flats, your lease details, service charge statements and any notices about major works
- Your mortgage balance, monthly payment, deal end date and any early repayment charges
- An estimate of your home’s value and how it was built, if you know
- Details of any CCJs, defaults, missed payments or arrangements, with dates
- Proof of income and a summary of your regular outgoings
Frequently asked questions
Can I remortgage within 5 years of buying my council house?
It can be possible. A remortgage is not a sale, so it does not usually mean repaying the discount, but your former landlord may have a charge on the home and may need to agree before a new lender can take first charge. Borrowing extra may lead to more questions. Check your agreement and contact your landlord early.
Will I have to repay the discount if I remortgage to release equity?
Repaying the discount is linked to selling or otherwise disposing of the home within the set period, rather than to borrowing against it. Raising money may still need your former landlord’s agreement while the period is running, so check your agreement and speak to the landlord or a solicitor before you apply.
Do lenders treat ex-council houses differently?
Many treat a former council house like any other home. Some lenders may be more cautious about certain flats or non-standard construction, and the valuation will highlight anything that matters. An adviser can check which lenders may consider your property type.
Can I remortgage a Right to Buy home with a CCJ?
It may be possible. Lenders look at the date and amount of the judgment and whether it is paid, alongside your equity and income. The Right to Buy side is mostly about the discount period and the property itself, so the two are assessed separately. See remortgaging with a CCJ.
Can I add or remove someone from the title when I remortgage?
Changing who owns the home is called a transfer of equity. Within the discount period some changes of ownership may count as a disposal, although some transfers, such as to a spouse or civil partner or under a court order on divorce, may be exempt. Check with your former landlord or a solicitor first.
I bought under Right to Buy in Scotland or Wales. Does this apply to me?
Not in the same way. Right to Buy has ended in Scotland and Wales, and each had its own rules on discounts and repayment. If you bought some years ago, any repayment period is likely to have passed, but check your paperwork. For Scottish credit issues, see bad credit remortgages in Scotland.