What is FHTB?
The new Forces Help to Buy [FHTB] scheme is aimed primarily at helping first-time buyers, along with those who need to move home, following a new posting. The loans aren’t available to buy a second property.
The scheme is set to run as a three-year pilot scheme and the MOD has apparently made over £200 million available to fund it.
With cuts to the MoD budget, why has the government decided to provide a new source of funding? Certainly the MoD has made it clear for some time that they don’t want to have responsibility for housing the current number of Armed Forces personnel and their families. Furthermore, it appears that home ownership figures for serving military personnel are low when compared to home ownership in the civilian population. For example, whilst around 70% of officers are home owners, that compares with a full 90% of the similar socio-economic group. For other ranks, the rate of home ownership is much lower – just 35%, which compares with 65% of the equivalent civilian population grouping.
Why is the rate of ownership so low? One of the reasons is that many serving Armed Forces personnel find difficulties in getting mortgages from mainstream lenders, particularly those lenders who use automated credit scoring systems – partly due to a limited credit history caused by frequently being posted abroad, and as result, not appearing on any electoral register.
What happens to AFHOS and LSAP?
The FHTB scheme replaces the earlier Armed Forces Home Ownership Scheme, which has now been scrapped and in addition, the long service advance of pay loan scheme has been frozen. Those already in receipt of LSAP loan is not affected, but no new applications are being taken for that particular scheme.
FHTB looks like being much more popular
It seems likely that there may be significantly more take-up of this new FHTB scheme – but why?
- It’s much more generous – allowing a loan of up to half your salary, subject to a maximum of £25K, repayable in monthly instalments deducted from your salary, over 10 years.
- It can be used in addition to the existing help to buy scheme, which provides taxpayer insurance of up to 15% of the mortgage.
I want to know more about FHTB
Needless to say, there are limits on the eligibility of the scheme. Click here for much more information on how the scheme will actually work and how it relates to those already with all LSAP mortgage.
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