FREE Military Mortgage Advice
“We know that time is precious for you, we can work around your availability while searching for the most competitive mortgage products and overseeing your mortgage application from start to finish”.
Jonathan Smith – (CeMAP, BA Hons, Aff SWW, CeRER)
Military life, whether you’re in active service, working as support staff or a veteran, can lead to feelings of uncertainty when it comes to obtaining a mortgage or applying for a remortgage. You face numerous challenges, such as a low income when you start your military career, the need to frequently move around, being stationed abroad and having a poor credit rating as a result of your military lifestyle.
At Trinity Finance, we understand how your unique lifestyle can affect your ability to obtain a mortgage with some lenders. They have strict criteria that you have to meet and restrictions within the mortgage terms that you simply cannot adhere to when serving in the military. We have formed close relationships with lenders who are sympathetic to the obstacles often faced by military personnel and take a more flexible approach with their lending criteria and terms.
Our specialist mortgage brokers have extensive experience when it comes to helping members of the armed forces with their mortgage needs. Your case will be handled on an individual basis, taking into account the stage you’re at in your career, your personal situation and your mortgage objectives. We’ll search for the best deal to suit your needs from lenders who specialise in military mortgages. When you’re ready to proceed, your tailored application will be looked after from start to finish by your dedicated mortgage broker — even if you’re deployed during the process.
What is a military mortgage?
You may be wondering what makes military mortgages different from other types. The truth is, there aren’t specific military mortgages as such and you’ll have access to the same mortgages as everyone else. The difference, however, when referring to a military mortgage is that you’ll benefit from more flexibility, both with the eligibility criteria during the application stage and the conditions applying to your property once you’re a homeowner.
Many lenders understand the challenges that a military lifestyle can throw at you and make allowances with their mortgage products accordingly. They provide flexible solutions that are specifically tailored to issues faced by military personnel.
When applying for a standard residential mortgage, for example, you have to pass a lender’s affordability checks. At entry level in the armed forces, you’ll have a low income, which can hinder your progress with these checks and also mean you’re only offered a low amount for your loan. Your unique lifestyle in the military also won’t allow you to build up a good credit score as you’ll have gaps in your address and credit history from being posted overseas. As well as that, your postings will also mean your property will stand empty for long periods, putting you in breach of a standard residential mortgage.
Specialist lenders recognise these issues and, appreciating your demanding career and the difficulties you face, work around them to ensure that every eventuality is taken into account when offering you a mortgage. They can allow you to buy a property in the UK when you’re posted overseas, leave your property standing empty for long periods, rent your property out while you’re stationed elsewhere without having to switch to a buy-to-let arrangement and even buy a property overseas.
How much can you borrow?
When calculating how much you can borrow, lenders typically use a multiplier of 4.5 for your annual salary. There are some lenders, though, who will use a higher multiplier of 5 or even 6. Your affordability for a mortgage is determined by your income, expenditure and credit history as well as the reliability of your income. Lenders offering military mortgages are used to non-standard incomes and some will allow income supplements as part of the calculations. For example, you may receive military disability benefits or combat pay.
Our mortgage and protection consultants – located throughout Kent, London and Edinburgh – will discuss your income structure and tailor your application to maximise your loan potential. They can also advise you on the various schemes that are available to help you buy a property, as detailed below. To get started with your application for a military mortgage, just give us a call on 01322 907 000 and benefit from a bespoke service that provides extra flexibility to meet your specialist military needs. If you prefer, send your details to us by email at info@trinityfinance.co.uk or via our contact form and one of our military mortgage experts will reply to you as quickly as possible.
What help is available?
There are various government-backed schemes available to help you buy a property. One of them, the Forces Help to Buy scheme, is specifically aimed at helping military personnel to buy a property.
Forces Help to Buy scheme
This scheme allows you to borrow up to 50% of your annual salary to use as a deposit and to cover other costs related to buying a home. The loan is for a maximum of £25,000 and is interest-free. To be eligible for the scheme, you need to:
- Have completed a minimum length of service
- Have at least 6 months left to serve
- Meet specified medical categories
You can use this scheme to get on the property ladder as a first-time buyer or to move to another property, either because you’ve been assigned elsewhere or there’s been a change in your family circumstances. As this loan is intended to be used for your main residence, you can’t use it to purchase a buy-to-let property. The loan must be repaid within 10 years or when you leave the forces, whichever comes first. The Forces Help to Buy scheme is currently available until 31st December 2022. As you have to have at least 6 months of service left at the time you apply, you cannot benefit from this scheme as a veteran but there are other schemes you can take advantage of.
Help to Buy: Equity Loan scheme
This scheme, which is currently available until the end of March 2023, is aimed at first-time buyers looking to buy a newly built property. You can borrow up to 20% of the property price (or up to 40% in London) as an equity loan. To benefit from this scheme, you need to have a 5% deposit. When you add your deposit to the 20% equity loan, you only need to borrow 75% of the property price, giving you access to better rates. The equity loan is interest-free for the first 5 years and, once the loan has started, you need to pay a monthly management fee of £1 until it has been repaid.
You can increase your equity share in the property if you wish to by making part repayments, which are usually 10% of its market value at the time. Repayment of the equity loan must be done when you either sell your property, have paid off your repayment mortgage or the equity loan term ends. The Help to Buy: Equity Loan scheme can be used in conjunction with the Forces Help to Buy scheme. Not all lenders will allow you to use both but our mortgage brokers are familiar with those who will.
Help to Buy: Shared Ownership scheme
This scheme allows you to buy a percentage of a property – between 25% and 75% of its value – using your deposit and a mortgage. You then pay rent for the remaining share. When you’re in a position to do so, you can make part payments to increase your share of the property. You can use this scheme to have shared ownership of a newly built property or an existing shared ownership property. You’ll find the latter through housing association resale programmes.
First Homes scheme
Aimed at first-time buyers, the First Homes scheme provides you with a discount of at least 30% on the price of a newly built property. As a serving member of the armed forces or a recent veteran, you are prioritised so that you can buy a home in the area you need to live in and you don’t need to meet the local connection criteria set by the local council. You need to have a deposit of at least 5% but this is based on the discounted property price, making it much easier to save. The smaller mortgage requirement will also give you access to better rates.
95% mortgage guarantee scheme
The aim of this scheme is to allow first-time buyers to get on the property ladder and for existing homeowners to move up it with a 5% deposit. If you choose to benefit from the 95% mortgage guarantee scheme, you’ll need to take out a repayment mortgage with a fixed rate as well as paying your 5% deposit.
Under this scheme, the government has agreed to guarantee a percentage of each mortgage loan that’s offered as a way to encourage lenders to participate. In return, one of the conditions is that they must provide a 5-year fixed rate mortgage among the range of deals they offer. Accepting a 5-year deal will give you peace of mind that your rate won’t fluctuate during that period but our mortgage brokers will also ensure that you’re aware of the alternative deals available and help you decide which one is the best fit for your needs.
Can you get a military mortgage with a bad credit rating?
As we mentioned earlier, one of the stumbling blocks encountered by military personnel when applying for mortgages is their credit rating. When you’re stationed abroad, live in military accommodation or have to move around frequently, you’re left with gaps in your address history and an adverse effect on your credit rating. Lenders who offer military mortgages are more accommodating with their assessment criteria and take a case-by-case approach based on your military background. They will consider the reasons behind your adverse credit history as well as the age and severity of any bad credit issues.
At Trinity Finance, we work closely with lenders specialising in bad credit mortgages so are confident you can rely on an understanding approach based on the disjointed nature of your military lifestyle. There are ways you can try to improve your credit rating, which we’ve detailed below, and doing so will increase your chances of a successful mortgage application.
Improve your credit rating
Before you apply for a mortgage, follow these steps to help improve your credit score:
- Check the information on your credit report. It’s important to make sure this is accurate. If not, contact the credit reference agencies to correct any mistakes.
- Remove any links to others with bad credit. If your credit report contains a financial link to someone else with bad credit, ensure this link is removed.
- Register on the electoral roll. This will have an immediate positive impact on your credit score.
- Minimise your outgoings. Try to keep your expenditure as low as possible. For example, if you pay membership fees for something you don’t really use, just cancel your membership.
- Make payments on time. It’s essential to pay your normal bills on time.
- Reduce your debts. Try to reduce your debts as much as possible. Don’t be tempted to take on more debt, such as a payday loan, as a way to clear some existing debts. This will do more harm than good to your credit score.
The rates you can expect with a military mortgage
The rates offered for military mortgages are the same as those for standard residential mortgages. Lenders take various factors into consideration when deciding which rates to offer, such as your income and expenditure, your credit rating, the size of your deposit, your age and the type of property you wish to buy. As you might expect with some of these factors, there are steps you can take to try and improve the rates offered to you.
Pay a bigger deposit
The more deposit you can pay, the less you need to borrow, which lowers the loan-to-value (LTV) ratio. The lower the LTV, the more mortgage deals become available to you and the better the rates you’ll be offered. Having a bigger deposit also reduces the level of risk you present to a lender. This can help ease some of their concerns, such as having a lack of credit history.
Increase your credit score
A good credit score encourages lenders to offer better rates. Try to improve your credit rating before you apply for a mortgage as we’ve detailed above. As previously mentioned, lenders specialising in military mortgages are more flexible with their approach to credit ratings and our mortgage brokers will explore all of the mortgage options available and search for competitive rates.
Avoid an unusual property
The type of property you buy can affect a lender’s willingness to offer you a mortgage. Some properties have a non-standard construction, such as those with a timber frame or a thatched roof. These are perceived as high-risk properties to lenders, as are listed buildings, and can hamper your mortgage eligibility and the opportunity to be presented with good rates.
Specialist lenders are best approached when looking to buy a unique property. You need to remember, however, that you’re also likely to need a specialist lender for your military mortgage. Our mortgage brokers have unrestricted access to the market and can search for the right lender who can not only provide you with a military mortgage but also agree to offer you the loan to buy a unique property.
What happens if you’re deployed?
Being deployed at short notice is part and parcel of being a member of the armed forces. With that in mind, you can rest assured this is taken into account both during the application stage and once you’re a homeowner.
When applying for a mortgage
Don’t worry if you’re deployed while your mortgage application is being processed. Your dedicated mortgage broker will act on your behalf to ensure it proceeds smoothly in your absence.
When you’re a homeowner
With a standard residential mortgage, leaving your property empty breaches your mortgage contract. With a military mortgage, however, there are various options to choose from when you are deployed. You can decide to leave it empty, your family can live there while you’re away or you can rent out your home and use the extra income to cover your mortgage payments. Normally, a standard residential mortgage would have to be transferred to a buy-to-let mortgage for this purpose. However, you can apply to your lender for a consent to let on your existing mortgage instead.
Can you secure a buy-to-let mortgage as a member of the armed forces?
If you wish to buy an investment property, you can use a buy-to-let mortgage to finance the purchase but you won’t be able to benefit from any help via the Forces Help to Buy scheme. The criteria you need to meet for a buy-to-let mortgage will be the same as for everyone else but a specialist lender who’s used to handling military mortgages is likely to offer more flexibility regarding a complex income or lack of credit history.
You’ll need to pay a higher deposit for a buy-to-let mortgage and usually have to show that the projected rental income will cover the mortgage payments by at least 125%. Some lenders may also specify a minimum income, such as £25,000, particularly if you’re a first-time landlord.
Benefit from mortgage protection
As a member of the armed forces, you know only too well the level of risk involved with your career. Having mortgage protection in place provides cover for you and your family should you become injured or the unthinkable happens. You may already have looked into policies for critical illness and life insurance, only to discover that many providers charge increased premiums purely based on the fact that you’re in the military.
At Trinity Finance, we work with providers specialising in mortgage protection products for those working in the armed forces. Our mortgage and protection consultants can evaluate your risk levels depending on your role in the military and discuss the varying degrees of cover with you. That way, you can make the best decision to suit your circumstances and ensure the correct cover is in place to financially protect you and your family should the need arise.
Take advantage of our expertise to secure a military mortgage
Our expert mortgage brokers are here to simplify the mortgage application process for you, even if you’re based overseas. Located throughout Kent, London and Edinburgh, they can provide the guidance and support you need to secure a competitive military mortgage via a specialist lender who understands the needs of armed forces personnel.
Regardless of your income structure, credit history or whether you’re stationed in the UK or overseas, we can maximise your borrowing potential and search for the best military mortgage deal to meet your requirements. Whether you’re a first-time buyer, moving home, remortgaging for a better deal or buying an investment property, our specialist advisers are ready to find a flexible and competitive lending solution for you. Simply give us a call on 01322 907 000 to benefit from our tailor-made service that’s specifically geared to helping those in the military. Alternatively, get in touch with us by email at info@trinityfinance.co.uk or via our contact form and we will reply to you as quickly as possible with more information.
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