Forces Help to Buy: ten things you need to know

Kathryn Shaw, Associate in Coodes’ Residential Property team, highlights ten things you need to know about the Forces Help to Buy scheme.

Forces Help to Buy was launched as a pilot scheme in 2014 to address the issue of low rates of home ownership in the armed forces. Although the scheme has been in place for seven years, I feel there is still a lack of awareness about how it works.

If you are in the armed forces, you might consider accessing the Forces Help to Buy scheme to buy your home. Here are some of the key facts about the programme.

1. You can borrow up to 50% of your salary

If you are eligible for Forces Help to Buy, you can borrow up to 50% of your annual salary, up to a maximum of £25,000, interest free. You can then use the funds to pay towards a deposit and the costs associated with moving, including your legal and estate agent’s fees.

2. You have ten years to repay it

The amount you borrow will be divided into monthly repayments over ten years. The exact sum you pay back each month will depend on the amount you borrow, but you can make overpayments. You can start repaying the loan immediately, six months after receiving it or, alternatively, you can defer repayments until your final ten years of service.

If you sell your property with debt outstanding, you will need to repay the loan in full or transfer the outstanding amount towards the cost of another qualifying property.

3. It is not just for first time buyers

Although Forces Help to Buy can be particularly beneficial to those who want to get onto the property ladder it is not just for first time buyers. If you are already a homeowner, you may be able to access the scheme to move to a new property when your needs change. This could be, for example, because you need to relocate to a new area or require more space for your growing family.

4. Every force has different criteria

Broadly speaking, Forces Help to Buy is open to people who have served for at least two years and have more than six months service remaining. However, eligibility varies slightly across the different forces. If you are unsure whether or not you qualify, speak to your employer who should be able to advise you.

5. You don’t have to be married

It is a misconception that Forces Help to Buy is only available to people who are married and/or have a family. Whether you are single, married or cohabiting, you can access the scheme as long as you fulfil the criteria.

It is important to note that if your spouse or partner is also in service, you cannot both access Help to Buy. Only one loan is permitted for each property.

6. The scheme is not just for new builds

In many ways, Forces Help to Buy mirrors the Help to Buy scheme, which many first time buyers access. However, one key difference is that Forces Help to Buy is not limited to new build properties. You can use the scheme towards the cost of a property of any age of type, as long as it will be your home.

7. You cannot use the scheme to purchase a buy to let property

You can only use Forces Help to Buy towards the cost of your home. In other words, the property must be your main residence and you cannot use the scheme to invest in a second home or buy to let property. In some circumstances you may be permitted to let out your property after you have lived in it. However this is only permitted if you are permanently assigned to a new posting more than 50 miles away.

8. You can use Forces Help to Buy to extend your property

Some people access Forces Help to Buy because they have outgrown their current home. If you want to extend or modify your property, rather than move, you may still be able to access the scheme to fund the costs.

9. Your loan application will need MOD approval

Forces Help to Buy involves a very strict application process and the Ministry of Defence (MOD) will carry out a number of checks on your loan agreement and property purchase. We work closely with the MOD to ensure we provide them with everything they need to complete a purchase.

If you want to access the Forces Help to Buy scheme, you need to be prepared to act quickly and be organised. There are a number of forms to fill out and you will be required to provide your mortgage lender and conveyancer with various documents along the way.

10. The Forces Help to Buy scheme has been extended

Since it was set up as a pilot scheme in 2014, Forces Help to Buy has lent more than £280 million to over 18,000 armed forces personnel. Deemed a success by the Government, the programme has been made permanent.

For more information and advice on the Forces Help to Buy scheme, contact Kathryn Shaw in Coodes Solicitors Residential Property team: kathryn.shaw@coodes.co.uk or 0800 328 3282