Bought a house using Forces Help to Buy and now you or your partner has decided to leave the Armed Forces?
If you decided to leave one Regular Armed Service and join another (transfer from the Army to the Navy for example) you may keep the FHTB provided there has been no break in Service. If you re-mortgage, then the conditions outlined below would apply.
If you decide to leave the Armed Forces altogether and have a property which was purchased using FHTB and some or all of the loan is outstanding, you will only be allowed to leave if the FHTB has already been repaid in full or you have made acceptable arrangements to repay the FHTB in full prior to your leaving date. Please speak with your Unit HR Administrator about the repayment methods. One method of repayment may come from re-mortgaging the property and repaying the FHTB loan from the re-mortgage money.
You cannot leave the Armed Forces and retain the FHTB loan, regardless of if you are re-mortgaging or not. Your repayments will continue at the allotted rate until you leave.
If you re-mortgage in your notice period, the conditions set out below will still need to be met.
Are there certain conditions that you have to meet in order to be eligible to re-mortgage under the FHTB scheme?
If you wish to re-mortgage your property and increase the amount of mortgage you have on the property (in order to free up some cash) Defence Business Services, Military Personnel, FHTB Section (DBS Mil Pers, FHTB Section) will need to do some calculations which will analyse the total amount of equity in your property. Equity is any cash which you as the home owner have in the property. It is calculated by taking the full value of the property and deducting any money you owe on it from the total. This leaves you with a sum which is yours should you sell or re-mortgage the property or should you die. You must remember that any costs of dealing with the property (selling or re-mortgaging) would need to be taken from the equity so you would be left with less.
This figure is very important as the sum of your mortgage plus FHTB cannot be more than the total value of the property. For example, if you were to own a house for £200,000 and had a £150,000 mortgage and a £25,000 FHTB loan (meaning you currently had £25,000 equity), you could not re-mortgage the property for more than £175,000 as this would bring the total amount of money owing on the property to more than the property was worth, you would have no equity and the mortgage company and FHTB would lose money.
Once you are ready to re-mortgage you will need to send DBS Mil Pers, FHTB Section a copy of the valuation of the property which has been completed by the new mortgage company or confirmation from your current mortgage company that they are willing to lend the additional money, along with a copy of the new mortgage offer. If you are struggling with this, your Unit HR Administrator should be able to assist you.
If you wish to borrow more money from the mortgage company and you are left with no equity in the property you would have to repay all the FHTB before you complete the re-mortgage.
If you are simply changing mortgage provider and not borrowing any further money, this will not affect the FHTB and you can simply re-mortgage the property and let DBS Mil Pers, FHTB Section know.
Your three main points of contact when re-mortgaging should be a whole of market mortgage broker, your solicitor and Unit HR Administrator. Your financial advisor and legal advisor are there to act for you and make sure that everything runs smoothly with the money and legalities. Ideally, they should be military specialists as well, like Forces Family Finance. Your Unit HR Administrator will be able to help you with any FHTB enquiries you may have and also will have the contact details for FHTB and where to send all of your documentation to. Please use these contacts, it is their job and will make your transaction so much easier.
(With thanks to Hannah Stockham, Solicitor: info@gallowayhughes.co.uk 01372 237070)
YOUR HOME MAY BE AT RISK IF YOU DO NOT KEEP UP REPAYMENTS ON IT
