There are currently nearly 150,000 personnel in the UK Armed Forces, including the Army, Navy and Royal Air Force. We at Enness have recently been approached by several clients who are actively serving in the Armed Forces, which has got us thinking about military mortgages.
Whilst the military provides accommodation for its servicemen and women, there are many reasons individuals may want to own their own homes, either for their family’s stability or as a future investment upon leaving the military. However, for those who are busy serving their country, finances are often the last thing on the agenda—and there are several factors related to being in the Armed Forces which make securing military mortgages a challenge.
Unfortunately, being in the military for a long stretch can negatively affect your credit rating, especially if you’ve had to move frequently. If you’re a first-time applicant, having lived in barracks may mean you struggle to show a credit history. The best approach here is to work with lenders who can provide bespoke underwriting, ensuring you aren’t penalised because of your service.
Another potential problem is that you may have to face unforeseen circumstances, meaning you need to vacate a property you’ve bought. Fortunately, there are several lenders who have considered this aspect of military life and provisioned accordingly. For example, one high street bank will allow you to rent out your property for up to 2 years before changing to a buy to let mortgage. This is hugely beneficial for those who have been deployed.
Another lender Enness works with won’t charge additional interest rates when swapping to a buy to let, providing you can prove you’re a member of the British Armed Forces and have filled out their permission to let form.
On that note, securing a mortgage whilst deployed for a property to return home to can be a real challenge—a broker can come in handy here, as we regularly arrange mortgages for in the UK for clients based abroad.
Some major lenders offer specialist mortgage features for those in the Armed Forces. For example, some lenders require 2 years’ proof of address to process an application. Those in the Armed Forces can’t always provide this if their role has required them to relocate frequently, so one high street lender offers military personnel the freedom to use their British Army Postal Address.
Whilst there aren’t generally specialist military mortgage rates, there are certain types of mortgages which are likely to be more suitable for those in the military; trackers rates come with no early repayment charges (ERCs), for example, meaning you won’t be penalised should you need to move or change product.
When it comes to how much you can borrow, this is ultimately like any other mortgage, and will be dependent on salary history. As you work your way up through the ranks, the Army offers huge potential for salary growth. Whilst a Private can expect to earn under £20,000, a Brigadier can earn in excess of £100,000. If you’re earning a generous salary but have poor credit or limited history, approaching a broker with good lender relationships could be a good starting point.
Insurance against death in the line of duty is also key, especially if your family depends on your wage to make mortgage payments. This is not always a standard inclusion, so talking to a bespoke insurance broker like Enness Global Mortgages about an appropriate life cover may be useful.