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Soldier of misfortune

The armed forces are at a disadvantage when it comes to securing a mortgage. Paul Thomas asks if more can be done to get lenders to service this group

Brokers say under-writing and credit-scoring systems disadvantage armed forces personnel when they apply for a mortgage because their situation is not taken into account.

It has been well documented that first-time buyers have found it particularly difficult to get mortgage finance in recent years but those serving in the armed forces have found it arguably more difficult to find lenders that are willing to take account of their circumstances.

The Council of Mortgage Lenders has met with the Ministry of Defence to see if more can be done to help and says it has spoken to lenders to ensure staff are aware of the importance of servicing this group of borrowers.

Members of the armed forces may be required to relocate to several postings in the UK and abroad, during their time in service. Many have a British Forces Post Office address, which is used for the delivery of mail around the world and can affect their credit rating.

British Forces Germany Mortgages principal Nigel Garside, who is based in Eastbourne and has specialised in providing mortgage advice to armed forces personnel since 1987, says a good relationship with lenders is vital when arranging a mortgage for members of the armed forces.

He says: “If they have a British Forces Post Office address and ask for any form of credit on that address, it always falls over. What I have done over the years is to build up a reputation with lenders, who then underwrite a case in a normal fashion.”

When serving overseas, military personnel might be eligible for some allowances and benefits, covering a range of things from child allowance to travel and accommodation expenses.

Problems arise when trying to predict total income, as personnel do not get these payments when they return to the UK.

Capital Fortune managing director Rob Killeen says most lenders do not have the ability to take these allowances into account.

He says: “These people probably receive a disservice, given what they are doing for the nation. Lenders’ underwriting systems are not built to consider all the different types of remuneration. For example, they will have a basic salary, overseas award and several others that make up the pay slip.

“You cannot really rely on the total income because what they are being awarded is made up of a lot of different aspects. That is where access to an underwriter directly would be helpful. It throws in a range of issues that are quite unusual for automated systems to fathom, meaning these cases do tend to be more problematic.”

The problem does not just apply to those serving overseas. Garside says it applies equally to those stationed in the UK and does not allow them to build up a credit history.

He says: “Some of them could have four or five addresses in the last three years and, in the middle of those three years, they could have had a tour overseas. It does not give them an ongoing credit history.”

However, Killeen says there are lenders willing to consider these cases. He says: “There are certain lenders who will give us special dispensation for the armed forces but that is not across the board.”

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