Barclays will use the discount awarded through the Right to Buy scheme in place of a direct deposit, in an effort to improve access to homeownership and allow borrowers to benefit from a lower-loan-to-value (LTV) mortgage.
For example, someone receiving a 40% discount on the price of their home through the Right to Buy scheme will be considered to have a 40% deposit and therefore be on a rate at 60% LTV.
Lending is capped at 90% of the full market value and excludes high-value properties. Barclays will still require a deposit for high-value properties.
Lee Chiswell, head of mortgages at Barclays, said: “The Right to Buy scheme has long been a crucial route to homeownership 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 homeownership.”
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This year, Barclays has introduced a number of measures intended to make homeownership more accessible to both first-time buyers and existing homeowners.
This includes its Mortgage Boost range, which allows family or friends to boost the amount someone can borrow without having to lend or gift money directly.
It also increased the maximum loan amount for high-LTV purchases to £640,000 for houses and £310,000 for flats.
This article was first published on our sister site, Mortgage Solutions. Read: Barclays launches 0% deposit mortgage for Right to Buy applicants