NEM House purchase/rental proposals...

[Ascoteer]

Hello all,

I missed the road shows due to shovelling sand; has anyone heard anything more than rumour regarding increased measures for house purchase and/or rent contribution? I've heard differing rumour as to whether this will be an enhanced LSAP, a 'dip' into pension funds or an equity loan scheme.

Cheers in advance! :ok:

[Lima Juliet]

Ascoteer

I can't remember the exact figure, but it was something like 50% of your basic salary up to £25k. So for an SAC it was going to about £9k, a Sgt about £17k and for a Sqn Ldr and above it was a flat £25k.

However this is their current thinking and is not agreed yet.

Please don't shoot the messenger if its not what you wanted...

LJ :ok:

[Just This Once...]

As per L-J's response plus they talked of an additional scheme to dip into your AFPS05 virtual pension pot; but this did not look attractive given the impact to your pension.

[gr4techie]

We want to make the possibility of owning a home a more realistic prospect

Then ironically NEM only offers a SAC just £9000. Would £9000 be anywhere near enough for a deposit for a mortgage on an average house.

[VinRouge]

why would an sac be buying an average house?

it needs to vary with posting location. the typical home in scotland is going to cost a lot less than one at northolt or Brize.

[gr4techie]

Why shouldn't an SAC, his wife and his family be able to buy an average house?

[VinRouge]

because your average sac is usually at an age whereby they will be entering close to the bottom of the market, not the middle.

[gr4techie]

Would you even struggle to get a mortgage for the bottom of the market with only a £9000 deposit?

[5 Forward 6 Back]

Probably, but I guess it's not meant to cover 100% of the deposit. There aren't many other employers I know of that will give you 50% of your salary as a low-rate (or is it interest free?) loan to help you buy a house, so it's not unreasonable to assume we'd be expected to cover part of it too.

[GalleyTeapot]

The % has been chosen to keep the repayments low, as a % of your salary, so as not to have an impact on your ability to actually get a mortgage.

[Stuff]

Since I'm on AFPS75 this didn't apply to me so I sort of switched off to this bit but I seem to recall that if they give you more than the proposed amount then HMRC would view it as a taxable benefit and not only would that then reduce the amount you'd get by the tax amount but would also count against you in terms of the total amount the banks would lend to you because it would be counted as a future debt. (or words to that effect)

Feel free to correct my vague recollection of events.

[GalleyTeapot]

Any amount of LSAP owed above £5000 is taxed by HMRC, same as the current rules.

[5 Forward 6 Back]

Correct me if I'm wrong, but isn't there a plan to expand LSAP to 50% of salary capped at £25k, and a separate plan to allow access to AFPS05/15 EDPs early?

Or are they one and the same, and therefore as an AFPS75 person I should temper my enthusiasm...?

[Biggus]

I don't know what the rules are on the new scheme, or even if current LSAP rules have changed recently, but I had an experience with LSAP several years ago which may be of interest to readers of this thread.

I took out £5,000 of LSAP, as it appeared to be effectively an interest free loan. However, it was viewed, at least by my mortgage provider, as a "second charge" against the property in question - not as a personal loan to myself. When I attempted to increase the size of my mortgage (school fees - boarding school allowance only covered about 50% of the fees, but that's a whole different thread) having a second charge on the property caused all sorts of problems, to the extent it was simpler for me to pay it all off there and then.

I could see this situation potentially effecting others in future. I only had about £4,000 left to pay off, which I could manage with a bit of juggling, if someone still had £25,000 outstanding it might be more of an issue!!

[junket]

5F6B - you are sort of correct - 2 schemes, but the EDP access applies to those on AFPS 05 (so now) and then AFPS 15 for all. Impact for those of us on 75, for this element, in the short term is minimal. Additionally with the pay back for this sort of access, ie if you grab £10k now from your EDP, that will be a different amount when you actually leave, so you may have to pay back more. Doesn't seem too attractive if that happens to be the case

The aspect of the amounts being discussed and their usefulness to those lower down the rank range and in high cost housing areas is an interesting one. Basically it was explained that the council of mortgage lenders would view any amount above 50% of salary negatively against any mortgage, so in effect you wouldn't be assisting the individual because the amount of mortgage you could get would be reduced accordingly. Also the HPI is viewed as a contribution to a deposit - there is an expectation that the individual should also save some of their money - not entirely unfair.

Ascoteer - regards charges for SFA/SLA - this was brought up. Basically we should, in the main, expect them to go up (this has been in the AFPRB report for the last 10 years or so), however the key point is that any rise in charges will go hand in hand with accn upgrades to both condition and service!! Also it was explained that when they have been working on the market average rate, they have been using the charges for local authority housing, so when comparing sizes of properties they are comparable for airmans quarters (so not expecting much if any rates rises). However, officer quarters are comparably bigger so there may be a rise for the officer cadre. But again any charge rise must be endorsed by the AFPRB and go with improved standards. Also note that the assessment methodology is changing for housing condition, which will be more modern and beneficial for the service person. Overall, I cannot honestly see a significant if any rise in accn charges in the short term - this does look to be a long term project though - especially when you consider the standard of much of our housing stock.

[GalleyTeapot]

Biggus, you should have been firmer with your mortgage company over the terms of LSAP. It is not a loan or second charge on your property, the LSAP folk cannot take your house away if you fail to pay it, thats what the insurance element of the repayment is. LSAP is simply an advance of pay, unsecured. A mortgage or other loan company may take the monthly repayment into account when calculating how much they are prepared to advance you, sensible enough.

[OldnDaft]

Biggus is correct - LSAP in the very early years had claim on the property but this was revised and is no longer the case.