IMPORTANT – the Long Service Advance of Pay scheme has now been frozen and is not open to new applications. It was replaced in April 2014 by the Forces Help To Buy Scheme [FHTB] – click here for information about how this new military home loans scheme can help you and how it affects those with an existing LSAP home loan.
What is Long Service Advance of Pay?
If you are fed up with living in service accommodation or you would like to get on to the property ladder, LSAP could provide the solution.
Long Service Advance of Pay [often referred to as LSAP] is an interest-free loan system created by the Ministry of Defence which has been designed to give military personnel a loan of up to £8500 [or 182 days pay if that is less] to put towards the purchase of a UK property. To discover exactly how much you are eligible for, you will have to fill a JPA Form E024 application a minimum of 6 weeks before your property purchase is due to complete.
It’s worth noting that LSAP is quite different from the Armed Forces Home Ownership Scheme.
How does LSAP work?
If you are interested in applying for the scheme, you will typically need to have found a residential property that a recognised institution (such as a bank or building society) is willing to offer you a mortgage on. Long Service Advance of Pay is not available to buy any business property.
You then need to apply for LSAP through your relevant military employer. If you are successful in securing the loan, this will then be paid back over the course of several years through deductions from your pay. Remember that if you get a loan of £5000 or more it will also have tax liabilities.
LSAP – what sort of property?
In particular your chosen property must be;
1. the only property you own
2. a residential property – LSAP is not available to buy any business property (even if it includes living accommodation)
3. a freehold house, or a leasehold flat with at least 70 years left to run on the lease
4. your property should be in the United Kingdom, Channel Islands or Isle of Man [although if one or more of your parents holds an Irish passport, Long Service Advance of Pay is available to buy property in the Republic of Ireland
5. a mortgagable property – ie one on which someone could get a mortgage. As a result your chosen property, for example, should be of standard construction
6. LSAP is not available to buy any mobile home, houseboat or caravan
Long Service Advance of Pay – repayment
A loan using this forces home loan scheme is normally repayable over a term of 10 years at a rate of 10% every year -and best of all, there’s absolutely no interest for you to pay. These repayment installments are simply deducted from your pay every month [although any outstanding payment can be deducted from your terminal bonus if necessary].
Am I eligible for LSAP?
If you are going to be eligible for the Long Service Advance of Pay, you will need to have served in the military for 4 years after completing phase 1 training if you are in the Army or Air Force. If you are in the Marines or Navy, you will need to have been accepted onto the trained strength. To qualify, in addition you;
1. must remain in the military for at least another three months before you are discharged
2. must be medically fit
3. must not have been warned for discharge
4. you cannot have been paid any terminal benefit
5. you cannot have made an application for Premature Voluntary Release – unless you qualify for a terminal grant which is bigger than any LSAP loan (and out of which you are able to repay that loan)
Do I need legal advice?
You aren’t compelled to get legal advice if you are thinking of applying for a loan under the Long Service Advance of Pay scheme. However, you will need a conveyancing lawyer to complete your home purchase – so it makes sense to choose one who understands all about military matters and how to deal with drawing down your LSAP loan.
Contact our Long Service Advance of Pay experts today
Our conveyancing team understands all about LSAP.
- Call our military lawyers directly today on  422300 for a FREE quote or
- e-mail our team using the contact form below
Comments or questions are welcome.