Can You Remortgage a Property Bought with a Right to Buy Policy?

Answered on 1 August 2019 by

I have just taken out a mortgage on a right-to-buy property. The property is worth about £200k and as a right-to-buy tenant I got a discount of £75k. So I bought the house for £125k and that means I have £75k in equity in the property. I am in a 5 year mortgage term initially. I want to know how early can I remortgage to raise £35k from the property for an extension?

Nick Morrey

Remortgaging A Right To Buy Property

This is where you have the ability to buy a home from the council. It gives council tenants who are currently renting and some previous council tenants the opportunity to buy their home at a discount price. The Right to Buy is a government scheme in England.

The property discount can be up to 70% or £110,500 in London and £82,800 for properties outside London.

The discount you could potentially receive depends on:

  • How long you’ve been a tenant with a public sector landlord
  • The type of property you want to buy
  • The value of the property

To see if you quality for Right To Buy, read our Right To Buy guide.

Remortgaging a Right To Buy Property

As stated on the government website: "You can remortgage your home at any time. However, before doing this, you should talk to your landlord and obtain professional advice particularly if you are considering borrowing extra money". Following from this and if response to your question above, it is possible to remortgage within the pre-emption period, however your choice of lenders will be limited, and there will almost certainly be a redemption penalty on the 5 year product you have just taken out that will need to be taken into consideration. 

As you are looking to fund a home improvement, it could be worth looking at alternative methods to be able to fund this, you can find everything in our funding home improvements guide.

If you should wish to discuss your options in more detail, then please call us on 0330 433 2927.

Answers provided in response to Ask the experts are based on the information provided and do not constitute advice under the Financial Services & Markets Act. They reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them.

We recommend you seek professional advice with regard to any of these topics where appropriate.


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