Introducing the Forces Help to Buy Scheme
A HOME OF YOUR OWN T
Open to regular single and married personnel and those in a civil partnership
he new ‘Forces Help to Buy’ scheme looks to support first- time buyers and those who have to move home because
SOLD
they are assigned elsewhere. Also, where personnel have a change in their family circumstances, for instance, they need another bedroom because a child is on the way or there are medical reasons why their current home is unsuitable. The scheme can also help personnel move or extend their existing property. The loan cannot however be used to purchase a second property.
From 1 Apr 14, regular service personnel, single and married, will be able to borrow up to 50% of their salary (to a maximum of £25,000). The Forces Help to Buy (FHTB) Scheme loan is interest free and repaid over a period of ten years.
FHTB scheme will initially run as a three year pilot, for which the MoD has more than £200M of funding to allocate. During the pilot, the current Long Service Advance of Pay (LSAP) scheme will be frozen so as to avoid concurrent running of two schemes.
It is recognised that regular service, in particular, requires a long term mobility requirement on service personnel and this new Forces Help to Buy scheme is designed specifically to help address the impact this has on their family lives. It is in line with the principles of the Armed Forces Covenant and is therefore open to regular personnel only.
Home purchase advice To assist service personnel in knowing the housing options available to them, the MoD will be introducing a through-career housing advisory and education programme in 2015. This will help personnel with financial planning and explore the options. In the immediate term advice on options for home purchase can be sought from the Joint Service Housing Advice Office and from the Homes and Communities Agency website and www.
helptobuy.org.uk
How to apply
The mechanism to apply for a FHTB loan will be very similar to the existing LSAP application process. An application form will be available
26 Envoy Spring 2014
Eligibility and Scheme Rules Detailed ‘Forces Help to Buy’ eligibility criteria and a summary of the scheme policy rules can be found in detail in Annex A to DIB 201407 and covers: Eligibility; Loan Value and repayment; Access to Single Living Accommodation (SLA) and Service Families Accommodation (SFA); Letting the property on a posting in the UK or overseas; Tax implications; Support for movers; Death and medical discharge; and Personnel subject to Tranche 4 redundancy.
JSP 464 which details the full scheme rules will be published in advance of the scheme launch on 1 Apr 14. To be eligible for the scheme personnel must be: • Be in Regular service. • Have served for two years and be on the trained strength, whichever is the later. (RAF and Army personnel only. Naval Service personnel become eligible once taken onto trained strength).
• Have at least six months left to serve at the time of application.
• In the last twelve months, not have owned a property within 50 miles of the proposed house purchase.
Loan Value and repayment
Eligible personnel may borrow up to 50% of their annual salary (including specialist pay), capped at £25,000 for higher earners. The loan will normally be repaid over a period of up to 10 years, and the monthly repayment amount will be calculated on this basis. The loan limit has been set to ensure personnel do not borrow beyond their ability to repay. Approval for a FHTB loan is no guarantee that a mortgage lender will advance a mortgage. Depending on each applicant’s individual circumstances, mortgage lenders may further limit the level of loan that an individual could receive through the FHTB scheme. Personnel should speak in detail to their mortgage lender at the earliest
Should an individual in receipt of a FHTB loan leave service within the 10 year repayment period then the balance of the loan will have to be settled on leaving service. Terminal benefits can be used where applicable. Personnel in receipt of a FHTB loan will not normally be granted early termination unless they have made acceptable arrangements to repay the loan in full.
Those with less than 10 years to serve will not automatically have their monthly repayments adjusted to take account of a shortened repayment period and will need to ensure that they can settle the balance of the loan on leaving service. Personnel may opt to make a higher monthly repayment to reduce the repayment period or pay off a portion of the loan early should they wish. Acknowledging the costs of buying a home, those who have more than 10 years left to serve can opt to defer initial payment for up to six months.
The property to be purchased must be in the UK (or Republic of Ireland for those recruited there or that are of Irish parentage). The FHTB loan can be used in conjunction with the other Government wide schemes such as the Department for Communities and Local Government’s (DCLG) Help to Buy Equity Loan, but not the Mortgage Guarantee scheme. Mortgage companies are expected to be ready to offer mortgages to personnel with a FHTB loan shortly after the scheme goes live on 1 Apr.
Access to Single Living Accommodation (SLA) and Service Families Accommodation (SFA)
If an individual chooses to purchase a property using a FHTB loan and the property is within 50 miles of the current assignment location (or next assignment, if already confirmed) then they will not be entitled to either SFA or SLA at that location.
If the purchased property is located more than 50 miles from their current or next assignment location (for instance in order to base their family in a particular location) then they will be entitled to use SLA but not SFA.
www.raf-ff.org.uk
through JPA when the scheme is launched on 1 Apr 14. Applications to enter the FHTB scheme will be invited and considered from this date, but not before. Mortgage companies are expected to be ready to accept mortgage applications for those with a FHTB loan shortly after the scheme goes live.
opportunity. A small insurance premium will also be payable by all borrowers to cover the cost of recovering loans when personnel die in service or are medically discharged.
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