In a major boost for first-time buyers, Barclays has announced it will now offer zero deposit mortgages for individuals purchasing a home through the Right to Buy (RTB) scheme in England. The move eliminates the need for buyers to save for a traditional deposit, helping many who have long struggled to save for a deposit. The Right to Buy scheme allows eligible tenants to purchase their council homes at a significant discount. Historically, Barclays required a 5% deposit on RTB mortgage applications, but under its latest lending update, that requirement has been scrapped. In this article we will go over exactly what Barclays now offers and give some insights into how this might impact the UK housing market.
Zero Deposit Mortgages for Right to Buy Customers
Under the new terms, Barclays will use the Right to Buy discount as a substitute for a traditional deposit, effectively allowing buyers to access a no deposit mortgage. Borrowers will also benefit from the lower interest rates typically available on lower loan-to-value (LTV) mortgages. For example, a tenant purchasing a property with a 25% right to buy discount will be treated as though they have a 25% deposit. This would grant access to competitive rates usually reserved for 75% LTV loans, significantly reducing monthly repayments.
However, to ensure responsible lending, Barclays has capped borrowing at 90% of the property’s full market value. That means the bank can lend up to 100% of the discounted purchase price, provided it remains within the 90% LTV threshold. For high-value properties, defined as houses priced above £640,000 or flats above £310,000, Barclays will still require a deposit. In these cases, lending is capped at 85% of the discounted price or 80% of the open market value, whichever is lower.
A Step Forward for First-Time Buyers
Barclays is not offering a specific Right to Buy mortgage product. Instead, its entire mortgage range is available to Right to Buy customers, enabling access to a wide variety of fixed and tracker options, depending on the borrower’s individual needs. Other innovations from Barclays include Mortgage Boost, which allows friends or family to help increase a buyer’s borrowing potential without directly gifting or lending money, and expanded loan amounts for higher-LTV purchases, making more expensive properties attainable with smaller deposits.
Expert Reaction from Oportfolio Mortgages
Louis Mason, Marketing and Communications Director at Oportfolio Mortgages, praised Barclays’ move:
“Providing a zero deposit mortgage option through Right to Buy is a hugely positive step for first-time buyers. We speak to people every day who are ready to own a home but are held back by the challenge of saving a deposit, especially in the current economic climate. Schemes like shared ownership also provide options, but it’s clear there’s still a gap left by the closure of the Help to Buy scheme two years ago. It’s encouraging to see lenders like Barclays stepping up to offer practical solutions.”
Ready to Take the Next Step?
If you’re a tenant dreaming of owning your property, or simply looking to explore other alternative mortgage options, our expert advisors at Oportfolio Mortgages are here to help. We’ll guide you through every step of the process and find the right mortgage solution for your circumstances. Call or drop our team a message today to get started.
