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Armed Forces Mortgages – what you need to know
The UK’s Armed Forces consist of over a hundred thousand regular personnel responsible for defending the United Kingdom but unfortunately, many Armed Forces personnel could face different issues than ordinary civilians regarding access to certain services.
For example, Armed Forces personnel may find it challenging to get onto the property ladder. This is largely due to the nature of their job or their way of life while in service, as some members do not have permanent home addresses and they spend copious amounts of time living and working overseas.
In effect, it can be difficult for some army personnel to get approval for home loans and mortgages. Fortunately, thanks to initiatives like the Forces Help to Buy scheme, regular service personnel could find it easier to get on the property ladder.
Are there mortgages for Armed Forces Personnel?
Despite the challenges faced by armed forces personnel when it comes to purchasing a property, they could still secure a mortgage.
As of 2016, some of the biggest high street banks in the UK are committed to adopting measures and packages designed to assist military officers in purchasing properties. Previously, service personnel who had to rent out their homes when deployed had to change their residential mortgage to a buy-to-let mortgage. This move often came with higher interest charges. Now, they no longer have to make that change, saving them additional time and money.
This also allows personnel stationed overseas to purchase homes in the UK and leave them unoccupied for an extended timeframe.
Now, many lenders specialise in mortgages for members and ex-members of the Armed Forces.
What Military Mortgage assistance is available?
As a specialist mortgage broker, we’re able to access a number of different mortgage products from a variety of lenders to help you get on the property ladder.
The Forces Help to Buy Scheme
The Armed Forces Help to Buy scheme launched in 2014. This £200 million scheme enables service personnel to borrow up to 50% of their salary, with no interest, to either purchase their first home, move to a new home upon deployment, or move their families when the need arises.
All regular Armed Forces personnel qualify provided they have the following:
- Completion of the required length of service
- Are medically fit
- Have six or more months to serve at the time of applying
However, there may be some permissible exceptions, especially when it comes to being medically fit. So be sure to consult with a specialist to understand how this might be useful to you.
The Help to Buy Scheme permits military personnel to borrow up to a maximum of £25,000, which can cover estate agent and solicitor fees, as well as make a deposit. Service personnel can apply for the loan online via the Personnel Administration System. This scheme will end in December 2022; therefore, ensure that you send your application by the end of that month.
Forces Help to Buy – what options are available?
Service personnel can also apply for the Help to Buy Individual Savings Account (ISA), whereby the Government tops up your savings for a mortgage deposit. So, for every £200 you save, the Government grants a bonus of £50. At the very least, it will pay £400 and at the most £3,000. You can use this scheme in addition to the Forces Help to Buy scheme.
Getting the most suitable Military Mortgage
Lending schemes like the Forces Help to Buy can be an excellent help when it comes to saving for a mortgage deposit. However, other mortgage loans in the air force, army, or navy do not offer loans with substantially different rates from that of civilians.
Lenders will still have to consider the risk factors involved in issuing a loan to determine what rates they can offer you. They would often look into your credit history, deposit, income, age, and property type you wish to purchase.
Can I secure A Buy To Let Mortgage if I’m in the military?
Yes, you could. However, it is important to note that you will not be eligible for the Forces Help to Buy scheme because it is only for properties to be used as the main residence. A buy to let mortgage is for people who wish to purchase property and rent it out to tenants. Usually, you will be required to pay a higher mortgage deposit with a higher interest rate.
To summarise, before deciding on taking a home loan, you should conduct the necessary research, especially if you are a first-time buyer. Be sure to consult with specialists who can give you sound advice on the direction you need to take.