I don’t know about you but if I see another article about the MMR I may scream – or at least use the executive stressball I picked up at a seminar earlier this year.
I want to talk about a new lending scheme, which arrived pretty much under the radar: the Forces Help to Buy scheme.
Launched in April, its arrival was overlooked at the time, probably during the lead-in to the MMR. Oh no – I mentioned it. Apologies.
The Forces Help to Buy scheme was designed to replace the LSAP (Long Service Advance of Pay) scheme, where applicants within the armed forces could apply for up to £9,000 to assist them with a new mortgage.
The new scheme allows applicants to achieve a deposit of up to 50 per cent of their annual salary, which they then repay over a 10-year period through their payroll system.
The idea of this scheme is to help armed forces personnel onto the housing ladder.
But I have spotted a flaw – at least in the approach from participating lenders.
In certain areas of the country, where higher house prices have an effect, the maximum amount on offer of £25,000 may not be enough to provide a deposit acceptable to a lender.
As a result, even with this scheme, some armed forces personnel may not be able to get onto the property ladder.
Some participating lenders require a 10 per cent deposit so if you are buying a property worth more than £250,000 with the maximum support under the scheme, it will not necessarily work for you.
So how can it be that a member of the general public can apply for the Government’s standard Help to Buy scheme with a 5 per cent deposit – and have a selection of lenders to choose from – but a member of our brave armed forces could find themselves in the position where they have to top up the Forces Help to Buy scheme deposit?
I experienced this first-hand with clients recently. Luckily, a lender was available to assist the client, allowing them to proceed with a 5 per cent deposit as first-time buyers using the Forces Help to Buy scheme.
You will not find many lenders which offer the standard Help to Buy scheme offering those same deals to Forces Help to Buy clients. You may be looking at a 10 per cent deposit in many cases to allow them to proceed.
I do not see the lenders involved supporting the scheme in the right way; they should be offering specific deals for Forces Help to Buy. Lenders, treat our armed forces fairly, please.
Stuart Gregory is managing director of Lentune Mortgage Consultancy