Forces Help to Buy (FHTB) was introduced in 2014 as a £200 million scheme to help Service personnel get on the property ladder. The fact that the latest ﬁgures show that since that time around £215 million has been spent is testament to its popularity. If you haven’t looked at how the scheme could help you and your family, it’s time you did since it is scheduled to close at the end of December 2018.
The latest set of quarterly statistics, published by the Government, suggest that the scheme that allows Service personnel to borrow up to 50% of their salary, interest-free, in order to buy their ﬁrst home or move to another property, is as popular as ever. In fact, there was a 5% year-on-year increase, up to 2,435 in the number of ﬁrst stage applications between Q4 2016/17 to Q4 2017/18 – and payments made to 851 Service personnel in the last recorded quarter.
It’s possible that the scheme has seen an increase in popularity because it has been written about so widely or because of the generosity of the scheme that has allowed the idea to go ‘viral’. However, it’s also possible that more and more Service people are feeling under a little more pressure to ﬁ nd out more about it since it’s due to close at the end of December 2018 – having already been extended beyond its original deadline in October 2016.
As it stands, the scheme has made payments to around 14,300 applicants, totalling around £215 million with an average of approximately £15,000 per claim.
Forces Help to Buy has been an enormous success and may be extended again but there simply are no guarantees to that effect so best advice has to be to act now to avoid disappointment.
How FHTB works
- The scheme allows Service personnel to borrow an interest-free advance of up to 50% of their salary (to a limit of £25,000), which they can use towards a deposit on a property. This is then paid back over 10 years through their monthly salary.
- FHTB is also available for extending existing homes due to a change in circumstances. Serving members of the regular Armed Forces are eligible for FHTB provided they meet certain criteria. Royal Navy or Royal Marines personnel must have been accepted onto trained strength. Army and RAF personnel must have completed two years’ Service from the date of enlistment and be on the trained strength, and have at least six months left to Serve.
- Personnel who have owned a home in the last 12 months that was within 50 miles of the home they plan to buy are unable to access the Scheme, unless there are extenuating medical and family circumstances.
- Whilst the FHTB loan is interest-free you will need to pay a small insurance premium, which will also be deducted from your wages every month. The monthly payment will be around £6.50 or less, based on how much you actually borrow under the scheme. This insurance policy will ensure that any outstanding loan will be entirely paid off should you either get a medical discharge or pass away while still Serving in the Military.
- Forces Help to Buy was designed to assist ﬁrst-time buyers, or those who are moving home and cannot be used to pay off an existing mortgage. If you use the scheme, you’ll be expected to live in your new home unless you’re assigned elsewhere.
- You cannot use the loan just to enhance or expand your current house unless perhaps if it is not appropriate for medical or other family reasons.
- The remainder of your home purchase is covered by a mortgage loan from a lender such as a bank or building society.
- The outstanding balance will have to be paid off if you accept a loan under the new scheme but leave the Military before you have completed your repayment. Your terminal beneﬁ ts can be used to help clear any outstanding loan, as conﬁrmed by the Government.
- There may be instances where exceptions to the standard rules (and eligibility criteria) may be justiﬁable, especially where you have extenuating medical and personal circumstances. (Other government-backed housing schemes can be used together with Forces Help to Buy except the Help to Buy Mortgage Guarantee.)
Another Option – Shared Ownership
Shared ownership is designed to make that ﬁrst step of getting onto the property ladder possible by enabling an initial purchase for part of the home. While repaying a manageable monthly mortgage amount for part of your property – usually between 25%-75% – you continue to pay rent on the rest. The aim is to purchase the remaining shares over time, eventually owning 100% of your home.
The Forces Help to Buy scheme has helped around 14,300 applicants, with payments totalling around £215 million.