Forces Help To Buy

Introduction to Forces Help To Buy Scheme

The Forces Help to Buy Scheme (FHTB) was launched on 1 April 2014 as a three-year pilot scheme and was introduced to encourage and support home ownership for Service personnel. The scheme was extended for a further three years to December 2022.

If you would like to move out of service accommodation and get on the property ladder, the FHTB scheme is there to help.

The previous Long Service Advance of Pay (LSAP) scheme is currently frozen to new applicants however, existing LSAP beneficiaries may be able to apply for a new FHTB advance as long as they can meet the meet the requirements however, the FHTB would be abated by the outstanding balance of the previous LSAP loan.

Benefits of the Forces Help To Buy Scheme

FHTB is for the benefit of first-time buyers or for those needing to move to another property, either because they are posted to another location or as a result of certain qualifying family or medical circumstances. In the latter, FHTB can be used to modify or extend a property already owned.

When can't the Forces Help To Buy Scheme be used?

FHTB is not intended for the purchase of ‘buy-to-let’ properties or any other second property, but under certain circumstances can be used to extend or modify an existing property. FHTB define letting a property when receiving rent under a formal rental agreement, such as Short Term Let, Short Hold Tenancy Agreement, a Holiday Let and so on.

Eligibility

To be eligible forces personnel must fulfil certain criteria. All information can be found by forces personnel on their internal JPA system.

Am I Eligible?

You must be in regular service.
You can be single, married or in a civil partnership.
For those serving in the Army and RAF must have completed 2 years’ service from the date of enlistment and be on trained strength.
For those serving in the Royal Marines or Royal Navy you must be accepted onto trained strength.
You must have 6 months or more left to serve at the time of application.

What type of property is eligible?

Your chosen property must be:

Your first home for yourself and your immediate family– provided that it is at least 50 miles from your current property.
Must be a residential property – not available for purchasing business property.
Must be in the UK, Channel Islands, Isle of Man or in certain circumstances in Ireland.
A mortgageable property, must be of standard construction.
You cannot use the scheme to buy a mobile home, houseboat or caravan.
The loan must be used to help buy the property e.g. as part of a deposit. It cannot be used to pay for furniture or fittings.

Can other benefits be used in conjunction with FHTB?

FHTB can be used alongside other Government funded Help to Buy schemes and shared ownership properties. This will include the new Help to Buy scheme 2021-2023.

Do mortgage lenders accept FHTB?

You will need to apply for a mortgage separately. Most major mortgage lenders accept and recognise FHTB loan to be used as the deposit for purchase of a new home. Please do however note that FHTB cannot be used as an exchange deposit. Like a mortgage advance, if the purchase transaction fail to complete, FHTB must be returned to the provider. It cannot be held.

Because some mortgage providers do not accept the FHTB scheme you should always check before applying for a mortgage. You can do this by looking on their websites, asking in their branches or by phoning them. Alternatively, if you are planning to use a mortgage broker make sure you disclose that you are using FTHB at the outset.

Approval for FHTB is no guarantee that a mortgage lender will advance a mortgage.

Can I leave the Forces after receiving FTHB?

If you take out a loan under this new loan scheme, but you then leave the military before you have finished your repayment, the outstanding balance will need to be cleared. The government has confirmed that your terminal benefits can be used to help clear any outstanding loan.

Are my partner’s income and property into account?

It does not matter if your partner owns their own home – provided that it is in their name only on the property deeds, this will be ignored if you apply for an FHTB loan.

How do I apply for FHTB?

To apply you must complete the application from on Joint Personnel Administration (JPA). If accepted, you can be given a Personal Information Note by the MoD as evidence of your FHTB advance before you obtain a mortgage offer.

How does the Forces Help To Buy Scheme work?

Regular service personnel can borrow up to half of their salary and any recruitment and retention pay (formerly Specialist Pay) with a maximum loan of £25K under FHTB. The FHTB scheme is an interest free advance salary and is to be repaid over 10 years.

Will FHTB be a second charge on my property?

No. Forces personnel must agree to sign a Promissory Note agreeing to repay the FHTB advance. This will be forwarded to the applicant’s solicitor once entitlement to FHTB has been agreed. The Solicitor will forward this for signature to the applicant prior to the payment of the FHTB. Failure to sign and return the Promissory Note to the solicitor will result in non-payment of the FHTB.

What if I would like to sell/ re-mortgage or transfer my property in the future?

FHTB must be repaid immediately and in full upon a sale of the property or alternatively transferred to another qualifying property. FHTB should be informed immediately if service personnel intend to sell / market the property. Failure to report the sale or disposal of the property or to repay the outstanding balance immediately, will be regarded as a breach of the regulations.

Where a recipient of FHTB wishes to re-mortgage, service personnel must notify FHTB prior to taking any further advance of monies against the property. The sum of the mortgage plus the outstanding FHTB should not exceed the value of the property. FHTB will require either a copy of the valuation for the re-mortgage or confirmation from the lender that they are willing to lend the additional monies without requiring a formal revaluation or a copy of the mortgage offer in lieu of a valuation report. Should the value of the mortgage, plus the amount secured as a second mortgage, plus the outstanding FHTB exceed the value of the property the FHTB must be repaid in full.

In circumstances where the re-mortgage is simply to change mortgage provider to benefit from a lower interest rate for example and the value of the outstanding mortgage is not increased, then the re-mortgage can proceed.

Recipients of FHTB will be asked periodically to confirm that the property has not been let, disposed of or sold.

What is the process for repayment of FHTB?

Repayment of FHTB is dependent on an individual basis and the number of years’ service remaining. Monthly repayments are calculated on that basis and the applicants provided with a monthly payment amount which will be deducted from your pay monthly. You are able to make overpayments. Whilst there is no interest on the loan amount you will be required to pay towards an insurance policy, this amounts to £7 or less per month depending on the amount of the loan. Full or part repayment of the outstanding balance is also allowed at any time during service. You can start repaying the loan straight away, six months after receiving it, or in your final ten years if service.