Military Mortgages Explained

Being in the army often means moving around a lot. But that doesn’t mean you don’t want to put down roots and buy your own home.

Here, we investigate if there are mortgages specifically for military personnel and what financial schemes are available that could help your application. We outline how to get the best product for you and identify the common eligibility criteria you will likely have to meet.

Are there mortgages specifically for military personnel?

Not specifically, no. However, lenders try to take a more flexible approach to these applications.

They know that the nuances of military life can make it difficult to get a mortgage. Forces personnel may have a poor credit rating, for example, due to moving around so often. They could also receive a lot of their income through allowances, like a combat bonus, which may not typically be an earnings source that providers accept.

Many lenders can also help by extending standard residential mortgage rates, even though a property is a buy-to-let. Additionally, lenders don’t always accept applications from overseas citizens but may do so for someone serving abroad.

How long is the Forces Help To Buy Scheme available?

The scheme will close in December 2022. Most lenders accept it, like NatWest and Barclays, and many others do. Due to the wealth of options available, it’s a good idea to seek the help of a broker. They’ll help identify the most suitable provider for you.

How the scheme works

Forces Help To Buy allows you to borrow up to 50% of your gross pay to a maximum of £25,000. The loan is for 10 years and is interest-free. You can use the funds to help bolster a deposit or to help pay for solicitors’ fees or stamp duty. You can apply through your Joint Personnel Administration system (JPA) or complete a form called the EO35.

To be eligible for the scheme, you must:

• Be in the Forces (Army, Navy or RAF)
• Be serving for at least another six months
• Have completed the required length of service relevant to your field
• Meet the right medical categories
• Be buying your first home or another property due to being posted over 50 miles from your current house.
• Buy a home under £600,000

In addition to your eligibility, there are a couple of factors to consider before applying:

1. If your loan exceeds £10,000, you may have to pay tax on it. A broker could help you determine whether the tax payment makes the loan worthwhile.
2. If you make a joint application with another serving person, you can only have one loan from the scheme.

Can you combine it with other schemes?

Yes, you can – though not all lenders will be happy. A broker would be able to identify the providers who do.

Examples of other schemes that could be an option for serving personnel are:

• First Homes scheme: This relatively new scheme discounts a collection of properties by 30% to 50%. The scheme is open to military personnel, key workers and first-time buyers. Applicants must earn less than £80,000 or £90,000 in London. When selling the property, you have to sell at the same discount, too. You will also need to invest a 5% deposit from your resources.
• Shared ownership scheme. This scheme allows you to buy a share of a property in which you live, with the option to buy more in the future. For example, in England, you can purchase as little as 10% of a property, though many scheme users buy an initial share between 25% and 75%. For the share you don’t own, you pay rent.

How to get the best mortgage if you’re in the military

Your first step should be to find a specialist mortgage broker with experience arranging mortgages for military personnel. This will boost your chances of getting approved at the best terms available.

Using our broker-matching service, you can speak directly with the right broker by simply making an enquiry online.

They’ll be able to help with:

• Readying all the necessary paperwork
• Downloading your credit reports
• Finding the right lender and securing the best deal for you

Best military mortgage lenders

While there are no mortgages specifically for veterans, the best lenders will be the ones that take a common sense approach to any application from someone in the military. A wide range of mortgage providers do, which is again a good reason to use a broker so you can ensure you apply to the most appropriate one for you.

Banks like HSBC, Barclays and Nationwide are open to applications from serving personnel if they meet the rest of their eligibility criteria.

Eligibility criteria

As mortgage products for members of the military are not different to those offered to the majority of civilians, the eligibility criteria are mainly the same. However, lenders may not be as strict on some conditions when considering your application.

Lending requirements can be dependent on:

• Age. The youngest you can be for a mortgage is 18, though many lenders like you to be at least 21. The oldest is generally 70, though some may go higher.

• Income source. Not all lenders will accept all sources of income. Many are increasingly making exceptions for military personnel, however, and use their entire income as part of an application. So, they’ll count the living overseas allowance (LOA) in affordability assessments, for example.

• Credit rating. Lenders usually extend the best rates to those with clean credit histories. If regular moves have negatively impacted your rating, they may be willing to make an exception.

• Deposit. The lowest deposit you have to have is 5%, though many lenders require at least 10%.

Typically, to then calculate how much they are willing to extend, a lender will use a multiple of 4-4.5 times your income. If you need to maximise your loan amount, a broker will pinpoint a provider that takes into account all your income – so your salary and your allowances, meaning you should be able to borrow more.

Lenders will also conduct an affordability assessment to determine if you can comfortably meet a repayment schedule. So, if your expenditure is high, they may not lend even 4 times your salary.

How much you could borrow

Military mortgages are calculated the same way as mortgages to civilians, so you can use our mortgage affordability calculator below to get a rough idea of your maximum borrowing.

Remember that you might need a flexible lender who treats military applicants more favourably to borrow based on the higher salary multiples.

Speak to an expert military mortgage broker

When you are serving, getting a mortgage has some added complications, such as where you are based, how frequently you move and how your wages are paid. For that reason, using a broker is highly recommended for military personnel.

A specialist will be able to advise you as to the best lender for you, having appraised your financial situation. They’ll look at your income versus expenditure, suggest any mortgage schemes that could benefit you and determine which provider will accept your application. Plus, they’ll propose lenders that will extend you the best interest rates and best terms.

Our broker matching service will connect you with the best military mortgage specialist. Call us on 0330 818 7026 or enquire with us today so we can put you in touch.