As revealed in our recent study, men and women serving in the armed forces are more likely to request a loan than many other workers in the UK. In many cases, requesting a quick loan is often a short term fix to help pay bills and cover high rental costs. Most would prefer to pay for a mortgage instead of renting.
Five years ago, the government introduced the Forces Help to Buy scheme to help servicemen and servicewomen get together the much-needed deposit required to buy a home. To explain how it works, CashLady go into more detail below.
What is the Forces Help to Buy scheme?
The government-run scheme was first introduced in April 2014 to help regular armed forces personnel find a way onto the property market.
There is a low rate of property ownership within the armed forces and the scheme is designed to provide the opportunity to gather the funds required for a deposit.
It provides support for servicemen and servicewomen who are able to borrow as much as 50% of their salary interest-free. This is to be used to purchase their first home, or to move to another property on assignment, or if there is a change in their personal circumstances.
Who is eligible for the Forces Help to Buy scheme?
In order to apply for the scheme you must meet the following criteria:
- Army and RAF personnel must have served in the forces for at least 2 years continuously, as well as having completed Phase two training.
- You need to have more than 6 months of service remaining.
- Royal Marines must already have been accepted on trained strength.
- The property you wish to buy must be located in the UK.
- You cannot be a member of the Military Provost Guard or a reservist.
- You cannot have drawn any terminal benefits.
Each case will be judged on its own merit as there may be cases where individuals who do not meet the above criteria may still be deemed eligible due to medical or personal circumstances.
What is the maximum amount that can be borrowed?
Applicants are able to borrow up to 50% of their annual salary. However, this is capped at £25,000. If half of the individual’s salary is more than £25,000, they will not be able to borrow any more. The money can then be used for a deposit on a property, along with any of the associated fees, such as surveyors and solicitors.
How do you apply for the Forces Help to Buy scheme?
Those interested in applying for the scheme can do so by using the Joint Personnel Administration (JPA) system. Visit the JPA Self Service User Guide entitled ‘Applying for Pre-Approval for Forces Help to Buy’, for full instructions on what to do next.
To receive guidance about their application, they can discuss the issue further with their personnel agency and/or Chain of Command. It is also advisable to read some general information about buying a house if this is their first time doing so.
How much do you have to pay back?
This will depend on the amount borrowed. However, the loan will be spread across a period of ten years which must be repaid on a monthly basis. They are also free to pay more than the minimum amount required each month.
They have the choice to either start repayments immediately, six months after receiving it, or during the final ten years of their service.