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Gary Boakes shares his expertise on Military Mortgages.
Are there specific mortgages for military personnel?
Actually, no – there are no mortgage products specifically for the military. However, lenders are increasingly welcoming to people in the Armed Forces. They recognise the challenges of the military lifestyle, such as postings at short notice, living abroad etc.
So even though there are specific products, there are lenders out there that very much cater for people with military backgrounds.
How does the application process work for military mortgages?
The only major difference is whether the client is looking to use the Forces Help to Buy scheme, which I will come onto later. Otherwise, it is exactly the same process as for anyone else.
The lender will look at your income and expenditure just as with any customer. We may have to be a little bit more clever in choosing a lender depending on your address history. If you’ve been in barracks or have moved frequently in the last three years, that can affect your credit score. Some lenders are a bit more understanding than others, so it’s just knowing which ones to go to.
When is the fee due?
If you have any upfront fees on your mortgage such as a valuation fee, that’s paid when you apply for the mortgage. If there’s an arrangement fee you can either pay at application stage or you can add it to the loan. That way, it will incur interest over the length of the mortgage.
The solicitors fees will be due as you go through with them. But generally there are fairly small fees on most lenders’ products.
Should you buy a home while on active duty?
It comes down to the individual, really. Yes, you have the benefits of military accommodation, but it’s just whether or not that is suitable for you, your family, your lifestyle and your set of circumstances.
The military has its benefits when it comes to buying properties and you may get some extras from lenders. But ultimately, whether or not you want to buy your own home is a personal preference.
What mortgage assistance is available for military personnel?
A great start is to speak to a mortgage broker, as we’ll explain that actually there isn’t as much to worry about as you might think. We meet a lot of military people who are concerned about their changing addresses and the effect on their credit score. But we can reassure you that it’s not so different from the civilian world. Sometimes people can live in three or four different rental properties within a few years.
Another helpful area is the Forces Help to Buy scheme. We can explain how that works for you. But really the mortgage assistance and service you’ll get would be exactly the same as for any other customer that comes through the door.
What is the Forces Help to Buy Scheme? Are there other schemes or help available?
The Forces Help to Buy Scheme was reviewed last year and personally I think it’s fantastic news that the government decided to make this a permanent part of the military package.
The scheme lets you borrow up to 50% of your salary, up to a maximum of £25,000, to help with your deposit and solicitor costs. It’s a massive incentive. It is a loan so you will be paying it back from your salary on a monthly basis, generally over 10 years depending on how long you’ve got left to serve.
It’s a fantastic scheme and we were really happy to hear that it was going to continue. Anybody in the military is eligible for it, subject to certain criteria. You have to have completed a certain length of service, generally two years, and you have to have six months service remaining at the point of application. I think there’s a medical exam as well.
So if you’re new to the forces or if you’re just about to end, then it’s not for you. But those in the middle are all generally eligible subject to the criteria.
How much will I be able to borrow?
Again, it’s down to your individual circumstances. That includes your income and expenditure against what the lenders can and can’t do. People talk about income multipliers and the one that gets thrown around is four and a half times. But that’s just a guideline. Some lenders will let you borrow less than 4.5 times your income, and some will offer more.
It’s all down to your circumstances: income, expenditure, credit score, the deposit you’re looking to put down and where you want to buy. We can’t say for certain until the customer comes to us and we look at their specific situation.
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We want to give you peace of mind, knowing that no matter what happens, you’ll enjoy a financially secure future.
How can I improve my chances of acceptance?
The major thing, certainly with the military, is ensuring everything moves with you. So if you’re going to change address, make sure you change your bank statements and that you’re on the electoral roll.
It can be very easy to leave your contracts and bank details in one place and not change them as you move. But the more consistency there is with electoral roll, bank statements, payslips and other accounts etc., the easier it is.
A lot of people in the military make it simpler by having one central place, perhaps a parent’s address. Everything is registered there because they move barracks so much – it is a good way to make sure there is consistency from a credit score point of view.
It’s also important to make sure that your credit score is generally good. If you do have loans or credit cards, make sure you are making regular payments and that you’re not defaulting.
These are the main things that lenders will be looking at when you apply for a mortgage.
What happens to the mortgage application process if I’m deployed?
If you’re deployed during the application process we can continue to act on your behalf and keep things moving along. We can liaise with you to gather and submit all the relevant documentation.
You may well be buying as a couple, and if one of you is away on deployment but your partner’s back at home, that can make things easier. You can set up Power of Attorney as well, so that someone in the UK can look after your affairs when you’re deployed.
What else do we need to know about military mortgages?
There are some added benefits that you get with the military. One of the key ones is what we call ‘Day One Consent to Let.’ So people in the military have the ability to buy a residential property and let that property out on day one, with the view that they’ll move into it in the future. That’s not something that’s usually available to a civilian, and is a massive benefit.
You might be thinking that you want to buy a property but perhaps you’re not ready to move into it yet. Instead you can have someone living in it, paying your mortgage and making you equity.
Then when you’re ready at a later time, you’ve either got a property to move into or you’ve built up years of equity that puts you in a better position to buy the next home. That’s something we do quite regularly for our military clients.
Your home may be repossessed if you do not keep up with your mortgage repayments.
Approver Quilter Financial Services Limited & Quilter Mortgage Planning Limited 17/02/2023