Could the Forces Help to Buy help you?
If you are in the armed forces and finding it hard to afford buying a home, help is at hand. The Forces Help to Buy scheme can make getting on the property ladder easier than you may have first thought.
What is the Forces Help To Buy?
The Forces Help to Buy scheme (FHTB) is a housing initiative that helps military personnel to buy their first home, or move to another property if they need to relocate because of on assignment or new posting. The scheme offers servicemen and servicewomen an interest-free loan equivalent to 50% of their salary, up to a maximum of £25,000, which can be used towards the purchase price of a property.
The loan can be paid back over a period of 10 years. On average applicants receive loans of £15,000.
Generally the funds are used as a deposit or in addition to a deposit for people who might otherwise find it hard to afford to get on the property ladder while in the Army, RAF or the Royal Navy.
FHTB began as a trial scheme in 2014. It was due to expire at the end of 2019 but due to its success it will remain in place until at least 31 December 2022.
Who is eligible for FHTB?
To qualify, applicants must be in regular armed service, meet medical requirements and have at least six months left to serve. In addition, if you are in the Army or RAF you must have completed two years of service and be on Phase 2 training. If you are in the Royal Navy you must have been accepted onto trained strength.
The FHTB scheme is not just for married personnel or those with children. It is equally open to single military personnel. Anyone who is struggling to afford to buy a property while serving in the armed forces is eligible to apply for the FHTB.
Are there any limitations on what I can buy?
Should you be successful in your application, the interest free amount you receive must be used to assist with the balance of the purchase price and is intended to help first time buyers get on to the property ladder.
It is also designed to help personnel move, providing that their new home is more than 50 miles from their current home, should they be assigned elsewhere. FHTB is not intended to be used to purchase second homes or Buy to Let properties, or to be used to furnish the property. In some circumstances, the loan can be used to extend or modify an existing property, such as if your home is no longer fit for purpose due to medical reasons.
The property must be mortgageable, residential and of standard construction. Houseboats, caravans or mobile homes would therefore not be eligible. The property must be immediately occupied by you or your immediate family, unless you are buying the property while on temporary assignment or a tour overseas.
If you are also using the government-backed Help to Buy scheme in combination with FHTB, only new build properties are available to you.
How much can I borrow with Forces Help To Buy?
The Forces Help to Buy scheme enables military personnel to borrow up to 50% of their salary, at a maximum of £25,000, to use towards the costs of purchasing a property.
How do I pay back my FHTB loan?
A range of repayment options are available for successful applicants. You can choose to start to pay back your loan either immediately; six months after receiving the loan or in your final 10 years of service. You will pay monthly instalments, interest free, over a maximum of 10 years. You may overpay if you wish.
Applying for the FHTB scheme
Providing you meet the criteria, you can apply for the FHTB through the Joint Personnel Administration system. You can also speak to your Chain of Command and Personnel Agency for advice.
The FHTB is accepted by most mainstream mortgage lenders, although you need to make lenders and financial advisers aware beforehand as it needs to be factored into your affordability and borrowing capacity.
Frequently asked questions
How long does Forces Help to Buy take?
Once your loan has been approved it will take around two weeks for draw down of the funds. The application process can be combined with your house purchase, so will not extend the time it takes to buy your property.
Can you leave the Army with FHTB?
Yes, but you will still have to repay the outstanding amount of your loan. This can be deducted from any terminal benefits. The outstanding amount should be repaid before you leave, but monthly payments can still be made after you leave until the loan is repaid.
Is Forces Help To Buy interest-free?
Yes, the full FHTB loan value is interest-free. There is a small insurance payment to protect the loan, which is around £6-£7 per month.
Can I use FHTB with other schemes?
Yes. The scheme is available in conjunction with the Help to Buy scheme, which helps first time buyers and homemovers purchase new build properties. With Help to Buy you only need a 5% deposit and a 75% mortgage to purchase your new home; the rest is covered by a 20% loan from the Government. You will own 100% of your home from day one.
Is Forces Help To Buy for first time buyers only?
No, it is open to buyers who already own an existing property but through circumstances need to find a larger property – perhaps because of a growing family or having to care for an elderly relative.
Get an initial market appraisal of your property
The FHTB has been a great success and has managed to help a large number of our military personnel. But with the scheme now in its final scheduled year of operation this could be your last opportunity to take advantage of Forces Help to Buy.
If you have a property to sell, find out how much it could be worth with a free, no obligation valuation from haart, and factor this into your application for FHTB.