Could the Forces Help to Buy help you?
In 2014, a trial scheme was announced that would help military personnel buy their first home or buy a new home should they need to relocate on assignment. Due to the success of the scheme, it will now run until December 2022. The scheme is also available in conjunction with the government-backed Help to Buy scheme, making getting on the property ladder easy than you may have first thought.
The Forces Help to Buy scheme (FHTB) enables servicemen and servicewomen to borrow up to 50% of their salary, at a maximum loan of £25,000, to use towards the costs of purchasing a property. This could cover the deposit or other fees such as surveyors, legal costs and estate agency fees. The loan is interest free and can be paid back over 10 years via monthly instalments. The FHTB is also 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.
The FHTB has been a great success and has managed to help a large number of our military. It was reported in July 2018 that 33,476 applications had been made, with £242 million worth of loans being offered to approx. 16,100 successful applicants. Of those who received loans, 50% were Army, 29% were Royal Navy or Royal Marines, and 21% were RAF. On average applicants received loans of £15,000.
Am I eligible for the Forces Help to Buy?
To qualify, applicants must be in regular service, meet medical requirements and have at least six months left to serve. In addition, if you are Army or RAF you must have two years of service and be on Phase 2 training. If you are in the Royal Navy you must be accepted onto trained strength.
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, it is also not to be used to furnish the property. In some circumstances, the loan can be used to extend or modify existing properties, such as if your home is no longer fit for purpose due to medical reasons.
The property must be mortgageable, residential, of standard construction, therefore no houseboats, caravans or mobile homes, and must be immediately occupied by you or your immediate family.
Only one application can be applied per property, meaning if you and your partner are both serving, only one loan can be used. On the other hand, if your partner already owns a property that is in their name, this will not affect your application.
How do I payback my loan?
You will start to payback your loan, either straightaway, six months after receiving the loan or in your final 10 years of service. You will pay monthly instalments, interest free, over 10 years. You may overpay if you wish. If you leave the forces before paying off your loan, you will continue to pay it back monthly, although it is preferred that you pay the full amount back before leaving. Payments can also be taken from terminal benefits if necessary.
How do I apply?
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.
What is Help to Buy?
You can use your FHTB in conjunction with the government 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. For more information click here.