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CML welcomes Armed Forces mortgage guidance

Ryan Fowler

February 5, 2014

The Ministry of Defence has just re-issued its guidance to help members of the armed forces when they apply for a mortgage.

The over-arching principle in the mortgage guidance is that those who serve with the armed forces should not be disadvantaged because of their occupation.

Mortgage applications will be treated fairly and consistently with civilian counterparts and will not be automatically rejected purely on the basis of a BFPO (British Forces Post Office) address.

Practical tips for serving members of the armed forces include taking steps to ensure that they can be contacted so that lenders can deal with any queries as their application progresses.

The guidance also points to the importance of providing all the necessary evidence relating to income, expenditure and financial information specific to their military service (such as long service advance of pay, if relevant) to support their application.

The guidance gives advice on how to ensure that lenders have enough information about a potential borrower’s credit history profile to make an informed lending decision – and suggests that managing finances through a UK-based current account, even if based overseas, is beneficial.

The government has also announced a new scheme to help services personnel who want to buy their first home.

From April 2014, for a trial period of three years, regular personnel will be able to take a salary advance of up to 50% of their salary and up to a maximum of £25,000.

The government intends such loans to be interest-free but taxable, and repayable over a 10-year period. Full scheme details have yet to be announced. Lenders will naturally require all the normal affordability and eligibility requirements for a mortgage to be met.

Ex-armed forces personnel in need of housing will be able to benefit from funding for life-changing accommodation initiatives across the country, defence minister Anna Soubry said.

The new funding, guaranteed through LIBOR (London Interbank Offered Rate) fines imposed on banks, has doubled the total amount the government has given to armed forces’ and veterans’ charities through this scheme, which is part of the nation’s commitment to the armed forces covenant.

Thousands of veterans are expected to benefit from the extra £40m, which will help charities build new homes, buy new accommodation or spruce up old facilities. Projects are expected to include hostels and half-way houses for veterans who have fallen on hard times, supported housing for the wounded, injured and sick, and long-term care homes.

The guidance follows the announcement of a new scheme set up to help ex-armed forces personnel purchase a property with the assistance of a £40m housing fund.

The new funding, guaranteed through LIBOR fines imposed on banks, has doubled the total amount the government has given to armed forces’ and veterans’ charities through this scheme, which is part of the nation’s commitment to the armed forces covenant.

Thousands of veterans are expected to benefit from the extra £40m, which will help charities build new homes, buy new accommodation or spruce up old facilities.

Projects are expected to include hostels and half-way houses for veterans who have fallen on hard times, supported housing for the wounded, injured and sick, and long-term care homes.

She said: “The men and women of our armed forces have served their country with honour and bravery so it is only right that we help meet their housing needs when they have fallen on hard times, been wounded in service or need day-to-day care and support once they have left the armed forces.

Defence minister Anna Soubry said: “I am delighted that we have been able to double the amount we have already invested in projects through the LIBOR fines.

“This new funding demonstrates our unwavering commitment to our armed forces community and will help transform thousands of lives across the UK.

“Around 2,300 veterans are already benefiting from the £35m given out to LIBOR-funded projects over the past year.

“LIBOR funding is one example of the armed forces covenant in action. The covenant is about ensuring that the armed forces community is not disadvantaged due to their links to the armed forces.

“Since 2011, the armed forces covenant has helped regular serving personnel in a number of ways, including placing them at the top of the priority list for the government’s £500m FirstBuy scheme in England, providing £150m for the purchase of over 700 properties, and doubling the tax-free operational allowance.”

Robert Leader, chief executive of Blind Veterans UK, added: “Blind Veterans UK was delighted to have been awarded £1m from the LIBOR fines money in September 2013.

“The donation is going towards a major refurbishment of Blind Veterans UK’s Brighton care, rehabilitation and training centre.

“These alterations will enable all those using the centre to be helped in a safe environment for both themselves and the staff.”


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