Get in touch for a free, no-obligation chat about how we might be able to help you.
Get In Touch
Michael Webb returns to share his expertise on military mortgages.
Are there specific mortgages for military personnel?
There’s no particular mortgage but there are some schemes that are currently available for military personnel. You would still apply for an ordinary mortgage. In the past there’s been things like LSAP or long service advance of pay. That was replaced by Forces Help to Buy, which in turn ended at the end of 2022.
These are schemes that enable military personnel to apply for a loan that’s acceptable to mortgage lenders, and often help towards the deposit for a house purchase. There’s always been plenty of mortgage support for military personnel and I would anticipate that the government has something on the agenda to replace Forces Help to Buy.
How does the mortgage process work for military personnel?
It depends whether they are using Forces Help to Buy, in which case there will be an additional application process. There’s a department in Glasgow that deals with all of that. There’ll also be additional documentation to outline your acceptance on that scheme. The mortgage companies will ask for that.
Other than that the process is pretty much the same. A mortgage broker will ask to see a number of your payslips and corresponding bank statements, so we can assess your income and expenditure. We look at your overall affordability and how much lenders would loan you to establish your property price range.
We discuss what kind of deposit you have available currently. Deals are currently available with a 5% deposit – but that can change in both directions depending on the market. Then we would look at your credit file and then attain an Agreement in Principle so that you can move forward and make offers on properties.
Obviously as part of that we’ll make sure any mortgage payments that you’re going to commit yourself to are affordable and fit your personal circumstances.
Should you buy a home while on active duty?
We have certainly done mortgages for people who are on active duty. Usually they have partners in the UK that aren’t serving. We’ve done mortgages for people who have been in Iraq, Afghanistan and numerous other deployments around the world.
Typically all that’s required is for your documents and ID to be certified by your commanding officer. The banks will ask for that. If you have someone resident here in the UK that’s dealing with things they will have power of attorney for the legal process.
It’s very tricky to do that if you’re buying as a single individual because you’re not going to be able to view properties. It’s a case of yes, you can do it, but in reality it’s only possible where there’s a family relationship and someone’s doing the work required in the UK.
People also get stationed abroad. They’re not effectively on active duty but they might be based in Cyprus or another military location. They might look to buy a property here in the UK so their family can stay here and not have to move schools. Then the individual that’s in the army, navy or RAF will stay in military quarters but own a property over here -that’s a very common thing that we deal with.
We also work with lots of people who want to own a property in the UK and not keep moving as their orders change from one side of the UK to the other. Holding a property in a specific place gives better stability for their family. Banks are very open to and understanding of these situations.
What mortgage assistance is available for military personnel?
Something that military personnel can get is Permission to Let, and you can get that immediately. The lenders understand that this is a career where people move around a lot. So they will allow you to buy a vacant property – it can’t already be let out – that you intend to make your home in the future.
They will give you immediate permission to let, on completion. So that enables you to potentially buy a property with a 5% deposit on a residential mortgage, not a Buy to Let deal. On completion, because you are in the military, you can apply to immediately let the property.
Not all lenders allow this, so if it is your intention to do it you need to check you’re going with a suitable bank or building society. That then allows you to let the property and have the mortgage paid for by the rent you receive. There are obviously tax implications to investigate. But at some point in the future – two, five or 10 years down the line you can move into that home.
Speak to an expert
What schemes are available for military personnel?
Forces Help to Buy is the main one for military personnel. That was preceded by LSAP, Long Service Advance of Pay, which enabled people to take a loan as part of their deposit.
Help to Buy has ended (December 2022) and there isn’t anything in the pipeline to replace it. However, the government has historically been very supportive of military personnel purchasing property, so I do think they will introduce something similar.
Another thing to look at is Shared Ownership – a very popular way to get onto the property ladder, especially if you’re based in a more expensive area. I’ve already mentioned Immediate Consent to Let on residential mortgages, and that isn’t available to non-military people. So that’s a specific offer from some lenders to support the military.
How much can I borrow?
So this is a question everyone asks, no matter what their employment role is. There are a few key things that play into how much you can borrow.
First is your income and with the Forces we can use certain enhancements – particularly if you have had deployments that have increased their income. Some lenders will consider things like that. A good aspect to the military is that your pension is non-contributory so unlike the NHS, you don’t actually pay anything into it – your pension all comes from the government. That means there are no pension deductions on pay slips and that doesn’t reduce your affordability.
Then it’s just things like your outgoings and credit score. Depending on that you can still borrow upwards of five times your income but the result you get is unlikely to be an exact five times or 4.75 times your salary. It will be somewhere in the middle.
There are more factors to consider, such as whether you have any dependents. If you’re going to live on a military base and own a property elsewhere, there may be further costs incurred from living on that military base. Is there any rent and what’s the cost of running two homes? These are things that would be considered as well.
Overall, lenders want to make sure that your monthly payments are affordable. They’ll be stress tested at rates far in advance of what you’re actually going to be paying. So it’s difficult to say how much you can borrow – the affordability is complex. So sit down with a mortgage broker and we’ll work out exactly how much lenders will loan to you.
How can I improve my chances of acceptance?
The first one probably applies more to younger military personnel. If you are living in barracks, your address will be a building that will not hold a very good credit score – there might be 200 people registered there. There’s lots of issues around identifying you as living there. Lenders don’t see it as a proper address.
So if you are able to leave your bank account, your driving licence and address history at your parents’ home, that makes it simpler. You’re essentially just living at work. Lenders are quite comfortable with that – but you have to put everything through your home address and never use your military address on any application for anything.
If you’re taking military accommodation, typically a house within the boundaries of the military base, that’s different. You’re likely to have an address with only one family living there. You’re likely to have council tax bills and utility bills in your name. That means you’re building up a track record of living at that address – and that is valuable in getting a mortgage.
Another thing to bear in mind is making sure you’re actively managing your bank account in a sensible way. Avoid going overdrawn, particularly if you’re living in military quarters and you haven’t got outgoings like rent, utilities and council tax. A lender will know you’ll have to pay those in the future and if you’re not managing your account to give you enough to cover those, lenders get a little bit wary. They may well ask you to return after three to six months of demonstrating prudent bank account management.
They’re the two things that we’ve come across before for military personnel. When you first join the military you might be in training somewhere for six months and then move to your actual stationed location.Then you may go somewhere else for further training and there can be two or three years of moves, where you’d be better off leaving everything registered at home.
What if I’m deployed during the mortgage process?
Typically we would have all of your documents already. If you go to a war zone, anything we require is only going to be electronic. We might just require a letter from the commanding officer or for documents to be certified by the CO. So being deployed isn’t too much of a problem.
People do want to make sure that anyone they’re leaving behind is also protected, so you need to make sure that you’ve got relevant insurance in place. If you are going to be deployed to an active conflict zone, typically those insurances will need to be arranged via the military.
Most open-market insurers will want to know that you’re not going to be deployed in the next year or two. So that can throw up a few challenges, but they can be overcome.
How do I apply for a mortgage as military personnel?
Your first step is to arrange an appointment with a mortgage broker like ourselves. Sit down and discuss your affordability and how much you can afford to buy. We’ll make sure the monthly cost will be affordable based on your lifestyle and what you’re looking to do.
Once you’ve got something agreed to purchase we’ll prepare the mortgage application. You would need a solicitor to run the conveyancing process. For the mortgage we would need four months’ bank statements, four months’ pay slips and proof of your deposit.
If you’re selling and buying property we would need details of the sale price and your mortgage statement, to prove you have equity. We would then move forward to getting an Agreement in Principle with the most suitable lender for you.
Then it’s all about mortgage instruction and valuations. The mortgage application process can take anywhere from a few days to a few months – it really depends on how busy the lender is and how complex your case is.
Considerations like access to the property can hold things up, but usually we can get a mortgage offer within four to six weeks as an absolute maximum.
What fees are involved?
There are a few fees for military personnel buying a property. Your solicitor’s bill will be quoted to you approximately when you agree to buy, and typically the higher the property price, the more expensive your bill will be. Most solicitors will take a further £350 into account for your searches and to hold funds on account before they start work for you.
With mortgage-related fees, some can be added to the loan, such as arrangement fees. Mortgage broker fees and valuation fees will typically be due on applying for the mortgage. You will also need your deposit and some available funds to get the process started.
What other advice do you have on military mortgages?
Most military personnel face some complexities, based on their job. As we’ve already covered, you might be deployed, or you might be working elsewhere in the UK and want to provide stability for your children. There can be other complexities around income and wanting to use deployment bonuses.
So you really would benefit from working with a competent mortgage broker who deals with the military on a regular basis. Here at Mortgage Republic we’re based in an area of the country that’s densely populated with air bases and army bases, so we deal with military personnel all the time.
We have a deep understanding of the challenges you can face in getting mortgages. As brokers, our job is to navigate that and make it as easy as possible for you to buy a home.
Your home may be repossessed if you do not keep up with your mortgage repayments.