Virgin Money Introduces Armed Forces Help To Buy

by | Tuesday 28th Mar 2023 | Mortgage News

At Oportfolio, we are keen supporters of anyone who dedicates their life to protecting our country and our freedom as UK citizens. That’s why we offer special perks and discounts on our mortgage advice whenever we help people serving in the armed forces. Today we received the great news that Virgin Money and Clydesdale Bank will now both offer loans that support the armed forces help to buy scheme.

What Is Armed Forces Help To Buy?

The forces help to buy scheme is a scheme introduced by the ministry of defence in 2014. It is a scheme designed to support people who are serving in the British armed forces by helping them and their family to purchase a property for them to live in. Similar to the now defunct equity loan help to buy scheme, the government will potentially provide armed forces personnel with a loan towards a house purchase deposit.

In the current economy, the higher the deposit you can put down (cash contribution towards a house purchase), the better. Higher deposit mortgages generally carry lower mortgage repayment rates and putting down more deposit means that your mortgage affordability can also go up. For many people, saving even as little as 5% deposit to purchase a property can be extremely difficult, especially for armed forces workers.

How Does Forces Help To Buy Work?

In terms of how the scheme works, it’s really quite simple. The government will potentially be willing to lend someone who is serving in the British armed forces up to 50% of their annual salary (capped at £25,000) towards their deposit. So, if someone is looking to purchase a £200,000 house and get a 90% mortgage with a 10% deposit, normally they would need to either save or be gifted a minimum of £20,000 deposit themselves. However, if they use the forces help to buy scheme, they could either cover all of or part of the deposit by borrowing it from the government, as it doesn’t exceed 50% of their salary.

The forces help to buy loan is paid back over a period of 10 years in equal payments, and is deducted from your monthly salary like a pension or a student loan would be. Once the loan is paid back in it’s entirety, you will only have your mortgage left to pay per month. It’s that simple! Let’s look at an example of how this could benefit a serviceperson.

Example Of Armed Forces Help To Buy

An RAF fireman earns £30,000 a year. He is looking to purchase his first home at £170,000. He has managed to save 10% deposit himself (£17,000), he has also been gifted 5% by his grandparents (£8,500). That means that he needs a mortgage of £144,500,000. Unfortunately, the maximum mortgage available to the RAF fireman is £135,000 based on the lender’s affordability criteria. There is a shortfall of £9,500. The RAF fireman applies for armed forces help to buy support of £10,000 (around 33% of his annual salary). This means that he now needs a mortgage of £134,500 which is affordable for him. As he pays his forces help to buy loan off per month from his salary over 10-years, he will pay around £83 per month until the balance is cleared.

Virgin Money And Clydesdale Offer Armed Forces Help To Buy

There are many lenders that support the scheme by offering specialist forces help to buy loans, however there are still plenty that do not. In a message to brokers today, Virgin Money and Clydesdale bank have both announced that they will be offering armed forces help to buy loans for servicemen and women who qualify as specified above. The only other specifications that the lenders have clarified other than the standard forces help to buy criteria is that the monthly repayment of the loan must be included in the affordability calculator when checking the maximum borrowing figure with a broker.

Speak To Oportfolio About Forces Help And Armed Forces Help To Buy

Molly and Kristen from Oportfolio with the Virgin Money/Clydesdale representatives

Molly and Kristen from Oportfolio with the Virgin Money/Clydesdale representatives

As we have mentioned, we are big supporters of our serving men and women and want to be able to support them and their families as much as possible. If you or someone you know is currently serving in the forces and want to learn more about how to get a mortgage, please give our friendly and helpful team a call today. We are here to help. 

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If you have any questions about UK mortgage news or or anything you’ve read then please get in touch. We’d love to hear from you.

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