LATEST 2017 UPDATE. Forces Help To Buy was initially due to run for 3 years until April 2017, but the latest news from the MoD, released before Christmas 2016, is that it will be “extended to 2018“.
However not only has no exact date in 2018 been provided, there is also no guarantee that this generous interest free loan will continue beyond 2018, and therefore our advice, if you’re thinking of buying property, is to make the most of FHTB while it lasts.
As at December 2016, almost 10,000 service personnel had already taken advantage of this cheap loan scheme to buy their own property – borrowing over £142 million between them. Make sure you don’t miss out.
What is the Forces Help To Buy Scheme?
FHTB is the cheap home loan scheme which was set up to help serving UK military personnel in buying their first home – or in moving house. It largely replaces both the Armed Forces Home Ownership Scheme (AFHOS) and Long Service Advance of Pay (LSAP) scheme [for details see below], and is considerably more generous than either of these.
Broadly, subject to the limitations listed below, it applies to those serving in the British Army, Royal Navy and RAF.
So if you want to get out of service accommodation and get on to the first rung of the property ladder, the Forces Help To Buy Scheme is there to help.
How does the Forces Help To Buy Scheme work?
Regular service personnel can borrow up to half of their salary [with a maximum loan of £25K] under FHTB.
How long will the scheme run for?
To date, the government have committed at least £200 million to fund these Armed Forces home loans and have said that scheme will run for at least three years from April 1st, 2014.
FHTB – what type of property is eligible?
Your chosen property must be;
1. Your first home – or you can use the loan to buy a new home provided that it is at least 50 miles from your current property. The property must be for your immediate occupation or that of your immediate family. When it comes to single people who can’t occupy the property during the working week, it’s apparently okay if you live there at weekends and whilst on leave.
2. A residential property – this new mortgage loan is not available to buy any business property
3. Your property should be in the United Kingdom, Channel Islands or Isle of Man [although if one or more of your parents has an Irish passport, you can use the scheme to purchase a property in the Republic of Ireland]
4. A mortgagable property – ie a property in respect of which somebody could get a mortgage. So, for example, the property is chosen must be of standard construction
5. You cannot use the scheme to buy any mobile home, houseboat or caravan
6. The loan must be used only to help buy the property [e.g., as part of a deposit]. In particular, it can’t be used to pay for furniture or fittings.
Am I eligible for the FHTB scheme?
To be eligible for these military interest free mortgage loans, you will need to meet the following conditions;
- you must be in regular service
- it doesn’t matter whether you are married, in a civil partnership or remain single
- for those serving in the Army or RAF, you must have served for two years from your enlistment date and have finished your Phase 2 training
- for those in the Marines or the Navy, you must been accepted onto the trained strength
- in the last year you cannot have owned any property within 50 mile from the property you are hoping to buy using the scheme
- must have at least six months of service remaining when you apply for the loan
Can I get a loan under both FHTB and the Government Help to Buy schemes?
Are my partner’s income and property into account?
It doesn’t matter if your partner owns their own home – provided that it is in their name only on the property deeds, this will be ignored if you apply for an FHTB loan.
However, the flipside is that if your partner is also serving in the UK Armed Forces, you can’t both get FHTB to help buy a larger property – only one FHTB loan is allowed for each property
Forces Help To Buy Scheme – how does repayment work?
Taking out a loan under this scheme means repaying the loan over 10 years – but the best news is that there is no absolutely interest to pay!
Monthly instalments are simply deducted from your pay every month.
However, in taking out a FHTB loan, you will have to pay what is described as “a modest annual insurance payment” which will be deducted straight from your salary. This insurance policy will allow any outstanding loan to be completely paid off should you either die while still serving in the Armed Forces, or receive a medical discharge. Expect that monthly payment to be no more than around £6.50 per month – or less, depending on how much you actually borrowed.
Can I make an early repayment of my loan?
If you take out a loan under this new loan scheme, but you then leave the military before you’ve finished your repayment, the outstanding balance will need to be cleared. The government has confirmed that your terminal benefits can be used to help clear any outstanding loan.
Can I use this loan to help clear my existing mortgage?
No. Forces Help to Buy was set up to help first-time buyers or those who are moving house.
I need to make adjustments to my home – is FHTB available?
If your current home is not suitable for medical or other family reasons, it is possible that you could get a FHTB loan. You can’t, however, use the loan just to improve or extend your existing house or flat.
Does getting a FHTB loan guarantee me a mortgage?
Sadly not – you will need to apply separately for a mortgage, though make sure you tell the mortgage company that you have been granted a loan under the Forces Help to Buy scheme, which should help.
Do all mortgage lenders accept the FHTB scheme?
It appears not. We will update this website when we come across other details of banks or other lenders who are simply not going to participate in the Forces Help To Buy scheme – we are aware that, for some reason, Santander are not interested. Their website states quite clearly;
“Please note that we do not participate in the Forces Help to Buy (FHTB) scheme”
So if you want to use the FTHB offer, don’t try to get a mortgage with Santander.
What happens if I buy a home using FHTB, but I’m then posted overseas and want to go accompanied?
You can keep your FHTB loan, but if you decide to rent out your property out, then you will have to pay interest on the amount outstanding under your loan, while the property remains let.
AFHOS and LSAP – what happens to them?
Neither of these earlier schemes are now available for new applicants.
AFHOS [the Armed Forces Home Ownership Scheme] has now closed completely.
LSAP [the Long Service Advance of Pay loan] has been frozen. As a result, although new applications for loans under the scheme are not being accepted currently, if you have already taken out a LSAP loan, you simply carry on making your normal payments every month. However, it’s important to note, that if you already have an LSAP loan, you can apply to increase the amount borrowed to the new FHTP limit [ i.e. up to half of your annual salary, with a maximum loan of £25,000] if you’re looking to move home – provided that you’re eligible under the new FHTP rules.
Do I need legal advice?
You don’t have to do get legal advice to apply for a loan under the Forces Help To Buy scheme.
However, you are going to need a conveyancing lawyer to help you buy your property – so it makes sense to pick a law firm which really understands the military and how to deal with drawing down your Forces Help To Buy loan. [Click here to read about our conveyancing expertise]
Here at Bonallack and Bishop, we are members of Forces Law, a network of specialist military law solicitors and we represent hundreds of serving military personnel every year with a variety of legal issues – from buying property to courts martial in divorce. Although our 3 offices are on the edge of Salisbury plain, we regularly represent Armed Forces personnel both nationwide and abroad using phone, email and Skype video.
Help with filling in the forms
If you need help with the application form itself, the government have indicated that you can get advice through your chain of command and personal agency.
In addition, according to the government’s own website;
“Service Personnel are to apply for Forces Help To Buy (FHTB) on JPA through the this Self Service Application for FHTB. Full instruction on completion is on line in the JPA Self Service User Guide -Applying for Pre-Approval for FHTB”
Our lawyers are more than happy to help you with the legal aspects of buying a property using force help to buy, but with regard to any problems you have with regard to making the initial loan application, please contact the Joint Service Housing Advice Office
Civ: 01252 787574 | Mil: 94222 7574
Looking for legal help with buying property using a Forces Help To Buy Loan? Contact us today
Our conveyancing team has over 20 years experience in helping hundreds of military personnel throughout England and Wales in buying their own homes.
• Call our FHTB team directly today locally on  422300 or FREE on FREEPHONE 0800 1404544 for a FREE no obligation quote or
• e-mail our team using the contact form below
Comments or questions are welcome.