Barclays has said people applying for a right to buy mortgage with it will no longer need to put down a deposit.
Right to buy (RTB) enables tenants to buy their council home at a discount.
In the past, Barclays has required a 5% deposit, but it has confirmed it will no longer be requiring a deposit for its RTB deals, which are available in England.
Barclays said it will use the RTB discount in place of a direct deposit, while borrowers will also receive the benefit of the reduced rates available for lower loan-to-value (LTV) mortgages.
For example, someone receiving a 40% discount on their home under the RTB scheme will be considered to have a 40% deposit, giving them access to 60% LTV (loan-to-value) rates.
Lending is capped at 90% of the full market value, to help ensure responsible borrowing, Barclays said. This means that Barclays can lend up to 100% of the discounted price, as long as this does not exceed 90% of the valuer’s open market valuation.
Deposits are still required for loan amounts on “high value properties” – those above £640,000 for houses or £310,000 for flats. In these cases, Barclays can lend up to 85% of the discounted price, as long as this does not exceed 80% of the open market valuation.
Lee Chiswell, head of mortgages at Barclays, said: “The right to buy scheme has long been a crucial route to home ownership for council and housing association tenants, yet we know that saving for a deposit remains a key obstacle.
“By lending for the full value of the property, we’re removing the need for buyers to have any deposit at all, helping many completely sidestep their largest barrier to home ownership.”
Rather than offering specific RTB mortgage products, Barclays makes its mortgage range generally available to RTB customers.
The latest move by Barclays follows several new propositions and updates to its lending criteria, as part of a broader effort to make home ownership more accessible.
These include “mortgage boost,” which allows family or friends to “boost” the amount that can be borrowed towards a home without having to lend or gift money directly.
More widely in the mortgage market, the Financial Conduct Authority (FCA) is currently looking at its expectations for mortgage lending as part of proposals to streamline its rules, which could make it easier for more people to access home loans.
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