How Forces Help to Buy WorksOff By Ed Hanna
Forces Help to Buy is a generous scheme open to Service personnel. You can borrow up to 50% of your salary to a maximum of £25,000, interest-free, enabling you and your family to purchase a home and put down real roots.
Although the scheme was scheduled to close at the end of last year, its remarkable popularity and success was a factor in it being extended until December 2019.
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.
- The FHTB loan is interest-free but 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. In the case of invaliding or premature discharge/release of the Service person, recovery may be approved through the FHTB Insurance premium scheme, subject to the submission of casework to the DBS Mil Pers PACCC (through DBS Mil Pers, FHTB Section) who should consult the UMO as necessary. Consideration of the insurance of an FHTB balance on death in Service or retirement on medical grounds is to be initiated by completing the Form E035b which can be found on the Info Centre and sending it to the DBS Mil Pers, FHTB Section.
- 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 benefits 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.