The UK government have announced that the armed forces help to buy scheme will be made a permanent fixture in the UK property purchase market after 8 successful years. The scheme, which was introduced in 2014, was initially going to be a 3 year pilot scheme. But as more people applied for the scheme, and more armed forces personnel were given access to property, it was extended several times and now the government have made the decision that armed forces help to buy is here to stay for good.
Since it’s inception, the government claims that it has increased home ownership in people serving in the forces by 16% and since it was last extended in 2019, the scheme has gone from strength to strength with lots of positive feedback. The minister for defence people Andrew Murrison commented on forces help to buy being extended, saying: “I am delighted to announce that the Forces Help to Buy scheme has been made permanent. This recognises the unique challenges that service personnel, and their families face and gives the opportunity to purchase a property to provide stability during their service.”
What Is Armed Forces Help To Buy Scheme And How Does It Work?
The forces help to buy scheme is designed to help people serving in the forces to purchase a property without necessarily having to save any money themselves towards the purchase. Often, living on bases or in accommodation provided by the forces is the only option that service people have, however this scheme allows you to purchase your very own home with some very attractive incentives.
The scheme allows people to borrow up to half of their annual salary, capped at £25,000 towards purchasing their property. This can be used as a deposit, towards legal fees, estate agent fees, surveyors, home improvements, whatever you like essentially. It is interest free and can be repaid over a maximum of 10 years. That means that if you earned £40,000 a year in the military, you could potentially buy your own home for £200,000 with a 10% deposit of £20,000 (50% of your salary). The deposit would be paid back over 10 years with no interest incurred at around £166 a month.
Is Forces Help To Buy Different To Other Help To Buy Schemes?
Around the same sort of time, 2013/2014, the government released two other help to buy schemes. One was called the HTB equity loan scheme and the other was called the HTB mortgage guarantee scheme. Both have since ended and are no longer available. The AFHTB scheme is the only one that has been made permanent.
The HTB equity loan scheme was available to anyone who was a first time buyer and provided a loan of between 20 and 40% of the value of the property you were purchasing as an equity loan towards buying. The loan was interest free for five years and could be repaid at any time over 25 years. This scheme, although very successful, ran it’s course and was discontinued by the government in 2022. Although not confirmed, it is likely that there will be some form of replacement scheme introduced within the next two years.
The HTB mortgage guarantee scheme was a fairly short lived scheme where borrowers could be provided with a 95% mortgage, where the loan was guaranteed by the government in case the borrower couldn’t keep up with their mortgage, as opposed to the regular mortgage rules for a 95% loan. This scheme was discontinued several years ago due to a lack of popularity and the risk that the government and the lenders faced.
Who Do I Speak To About AFHTB?
At Oportfolio, we are specialists in government purchase schemes like help to buy and affordable property purchase mortgages. Our team of advisors and administrators have access to the scheme and all lenders who offer armed forces mortgages so we can advise on the best lender, best rate, and best product for your circumstances. Just give us a call and we will be able to help. Our initial mortgage consultations are free of charge.
