Many council tenants who want to buy their home worry that they don’t have enough saved for a deposit. However, for many Right to Buy buyers, a cash deposit isn’t required. The discount you receive from the council can act as your deposit instead.
That said, ‘no deposit’ does not mean ‘no upfront costs’. There are still fees to pay before you complete. This guide explains how the discount works as a deposit, when lenders may ask for cash on top, and what costs you should plan for. If you’re serious about buying your property, always speak with a qualified mortgage adviser first.
How does a Right to Buy mortgage work?
Right to Buy is a government scheme that lets eligible council tenants in England buy their home at a discount. The longer you’ve been a qualifying tenant, the bigger the discount can be.
The discount is applied to the property’s market value. You then get a mortgage to cover the rest. For example, if your home is valued at £180,000 and you receive a 35% discount, you would pay £117,000. You would need a mortgage for £117,000, or less if you also put in savings.
It’s worth knowing that Right to Buy discounts changed significantly in November 2024. For applications received from 21 November 2024, maximum cash discounts were reduced to between £16,000 and £38,000, depending on where you live. Further changes are expected following reforms announced by the government in 2026. Always check current rules with your council or speak to a qualified adviser before you apply.
Do you need a deposit for a Right to Buy mortgage?
Can the Right to Buy discount count as a deposit?
Yes, in most cases. Many lenders accept the Right to Buy discount as a deposit. The discount reduces the amount you need to borrow. This means the loan-to-value (LTV) ratio is lower than it would be on the open market, and the lender has a built-in buffer.
If your mortgage on the council property was £117,000, that’s a LTV of around 65%. Many lenders are comfortable lending at this level without asking for additional cash.
This is one of the key advantages of Right to Buy for tenants who’ve not been able to save a traditional deposit.
When might lenders still ask for a deposit?
Not every lender accepts the discount alone. Some may ask for a small cash deposit on top, depending on your circumstances. This is more likely if:
- You have a poor credit history or recent credit problems
- Your income is low or variable
- The property is non-standard in some way, such as a flat in a high-rise block
- The lender has its own minimum deposit requirements
Can you buy your council house with no savings?
It’s possible, but not always advisable. The discount can cover your mortgage deposit, but there are still upfront costs that need to be paid in cash before you can complete. These can’t be borrowed through your mortgage.
What upfront costs still need to be paid?
Even if no cash deposit is required for the mortgage, you’ll likely need savings to cover:
- Solicitor fees. You need a conveyancer to handle the legal side of the purchase. Costs vary but typically range from £1,000 to £2,000 or more.
- Survey costs. The lender needs a valuation. You may also want your own survey, especially if you’re buying a flat where shared costs and structural issues can be more complex.
- Mortgage fees. Some lenders charge an arrangement fee. This can sometimes be added to the mortgage, but doing so increases your loan and monthly payments.
- Moving costs. Even if you’re staying in the same home, there may be small costs involved in the transition.
Having a few thousand pounds set aside for these costs means you won’t be caught short when it comes to completing.
What if you have a smaller income or existing debts?
Having no cash deposit doesn’t mean the mortgage will be straightforward. Lenders still check that you can afford the monthly payments. If your income is low, you have existing debts, or you have had credit problems in the past, some lenders may decline your application.
Specialist lenders are more likely to consider complex cases. They look at the full picture rather than applying automatic rules. A broker who knows the Right to Buy market can match you to a lender that fits your situation.
Being prepared helps. Our first-time buyer checklist shows what lenders typically want to see.
What do lenders look at for a Right to Buy mortgage?
Affordability and monthly repayments
Every lender checks whether you can afford the mortgage. They look at your income, your outgoings, and how much you would need to pay each month. They then stress test this to check if you could still afford payments if interest rates went up.
Right to Buy buyers are often long-term tenants. Many have been paying rent for years without any missed payments. This track record can help demonstrate that you’re reliable, even if you’ve not held a mortgage before.
It’s also worth knowing what happens if payments become difficult after you buy. Read our guide on what happens if you miss a mortgage payment.
Credit history and financial commitments
Lenders check your credit file as part of any mortgage application. They look at missed payments, defaults, CCJs, and your existing credit commitments. A clean record makes the application simpler. An imperfect one doesn’t make it impossible; it just means you may need a specialist lender.
Right to Buy is different from buying on the open market. Some lenders specialise in this area and understand that applicants may not have a typical profile. They’re more willing to look at the full picture and make a decision based on your circumstances.
Right to Buy can also be a good route if you’d struggle to buy a similar home on the open market due to cost. It’s not the only route to home ownership for council tenants, but for many it’s the most accessible one. You can read about alternatives, such as a shared ownership mortgage if Right to Buy isn’t suitable for you.
Speak to a mortgage broker about your options
Right to Buy mortgages are specialist products. Not every lender offers them. Not every lender will accept the discount as a deposit. And the rules around the scheme itself have changed, with more changes to come.
A broker who knows this market can find the right lender for your situation, whether that’s straightforward or more complex. They can tell you which lenders accept the discount as a deposit, which ones will consider your credit history, and what you’re likely to be able to borrow.
Pepper Money works with a network of specialist brokers who help Right to Buy applicants at every stage. You can find a broker here and receive professional advice tailored to your needs.
This article is for general information only. Right to Buy rules are subject to change. It is not financial advice. Always speak to a qualified adviser before making any decisions.