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What is the Forces Help To Buy scheme? (FHTB)
The Forces Help to Buy Scheme (FHTB) is a scheme where members of the armed forces can take out an interest-free loan to put towards their first property. The loan is then repaid directly from their salary. The objective is to improve the rate of home ownership in military personnel, who have traditionally found it difficult to acquire a mortgage and purchase their own home. The scheme was launched in April 2014, and after its initial three-year trial, is scheduled to complete in December 2022.
Who is eligible for FHTB?
Many armed forces personnel will be eligible to apply for the scheme. Qualifying criteria include:
- Planning to live in the home that is purchased (or have their immediate family live it in)*
- Do not currently own a home (unless that home will be sold by the time the FHTB home is purchased.)
- Completed Phase One training
- Enlisted at least 12 months prior
- At least six months remaining before termination
- Not under warning or discharge
- No outstanding Crown Debt
- Not drawn any terminal benefits
*If you are single, or your spouse is also in the military, or you are stationed overseas, you must live in the property at weekends or during periods of leave.
Can I combine a Forces Help to Buy scheme with other government schemes?
Yes. The Forces Help to Buy scheme is separate from any other Help to Buy scheme and can be used in conjunction with the government’s Help to Buy Schemes (Equity Loan and Shared Ownership), as well as Help to Buy Scotland and Help to Buy Wales.
What’s the most I can borrow with the FHTB?
Eligible personnel can borrow up to 50% of their annual salary, up to a cap of £25,000. These funds can be used to contribute towards a deposit or other costs including solicitor’s fees or estate agent’s fees.
You cannot borrow more than is required, that is, the amount you can borrow is capped at the price of the property plus associated fees and mandatory repairs, less the combined value of the mortgage amount and any other beneficial schemes.
The FHTB loan amount may be affected if you earn any capital on the sale of your first home (if you are already a homeowner). This will generally be factored into the calculation described above.
Will using the FHTB scheme affect what mortgage I can apply for?
Most high street lenders accept FHTB, but some don’t. It’s always best to check before pursuing an application. If you use a mortgage advisor or broker to choose a mortgage, make them aware that you plan to use the scheme at the start of the application.
Being approved for a FHTB loan does not guarantee that you will be accepted for a mortgage. A mortgage lender will look at your wider financial circumstances, and using a FHTB loan towards a deposit may affect how much they determine you are eligible to borrow.
Is there anything else to consider when applying for a FHTB?
It’s worth noting that if you are assigned to an area within 50 miles of your FHTB property, you are disqualified from other residential benefits, including SFA (service family accommodation), SSFA (substitute service family accommodation) and SLA (single living accommodation), except in certain circumstances. The home you purchase with FHTB is intended to be lived in.
You can use a FHTB loan to extend your current property, for example, if you need more space with a growing family.
The loan can’t be put towards purchase of property with any commercial interests, such as a flat above a shop. It can be used towards purchase of land for a self-build property, as long as you intend to build on the land and live there within twelve months.
Choosing an Adviser
Selecting a qualified and experienced mortgage adviser is of great importance. To choose a suitable adviser, evaluate their qualifications, experience, and reputation, and ensure they are regulated by the Financial Conduct Authority (FCA).
Read reviews from previous clients and make sure they provide a clear explanation of the products and services they offer, as well as the fees and charges associated with them.
