Loan to buy house for Military

[racedo]

Wow what a wonderful idea of Govt to offer 0% int loans to members of the armed forces so they can buy their own property......................a far sighted and great idea.:*

Course they won't increase pay enough so people will be able to afford to repay loan or get a decent mortgage.

Spin Spin Spin and nothing of substance.

[CoffmanStarter]

I hope someone has told HMC&R NOT to apply "Beneficial Loan" taxation treatment to the individuals availing themselves of such a facility ... assuming that is also part of the scheme :rolleyes:

[Could be the last?]

Is this one of those "if we get re-elected" promises?

[Just This Once...]

Part of the NEM and has been discussed on here previously.

[Always a Sapper]

While it's a good idea, Im not so sure that it's been fully thought out, or putting the cynical hat on one wonders if it has and not for the advertised reason?

I can't see it helping the junior ranks much (who, should IMHO be the target audience), well not until their basic salary rises enough to afford the mortgage payments on top of the loan repayments as well.

I would fully expect the loan repayment rate to be closely tied to length of service left and probably come with an expectation that it's fully paid off before leaving colour service so some could have a nice surprise at that point (not).

It will however help those who should already be in a position to do the house buy thing on their own two feet, SNCO and Commisioned Ranks (grenade, pin.. pulled :uhoh: )

I would like to see them target the junior ranks better, esp the pads. Better wages would be good, decent housing (across the board on this one) and spread the cost of the loan across the whole term of the mortgage.

The truth of the whole issue? The great MQ sell off hasnt worked, the money didnt go back into the housing stock and they have NOT been maintained properly ever since. The MOD need to get folks out of the MQ and into their own house before the whole housing pack of cards comes falling down.

The Housing maintenance thing is currently out to industry as part of the next generation prime contract thing as a stand alone prime. Should be a giggle...

Thought.... I wonder if they could make a house part of the whole employment package? Sort of sign up for x years, accept a proportionally lower salary but we will provide you with a house to live in and you get to keep it at the end of your service... Do wonders for the whole recruitment/retention thing but may p*ss off the 'left' a wee bit.... Just a thought and it would need working on a bit mind.

[Canadian Break]

So, not having delved into the detail - how is this different from the Long Service Advance of Pay (LSAP) that you could get - interest free - to put towards a house?

[Hovermonkey]

CB, as per Just This Once's post this is part of the NEM and will replace LSAP. AFAIK the terms are largely similar but it is likely that any outstanding amount on leaving the service will be allowed to be deducted from pension. I am astounded by the negativity around this on these posts. I struggle to see how this is a bad thing, including on how it is 'not fair for the lower ranks'. For example, a serviceperson on £25000 would be able to obtain £12500 on the scheme. That is a 10% deposit on a £125000 starter home, the mortgage for which would be in the region of £450 to £550 PCM. Add repayments over 10 years of £104 PCM (plus tax??) to total around £650 PCM. This is comparable to civilian rent and isn't an excessive amount to pay back on that wage, especially if you consider a partner's wage on top. If they were saving for a deposit it would take around 2 years to achieve that amount with the same outgoing. Granted it doesn't really help the single serviceperson but its a start at a time where it looks as if prices are only going to rise.

[camelspyyder]

CB. LSAP maxed out at £8500 and has done for more than 10 years. It might have been a relevant amount for a deposit in the 90's but these days it's hopeless.

This new scheme of up to 25k is a lot better; mind you it is the only positive idea I've noted in the whole NEM.

CS

[Canadian Break]

Hover/Camel

Thanks for the info; I agree - why all the negativity. Some people are just not happy unless they are unhappy!

[Tankertrashnav]

I really sympathise with young people in the armed forces trying to buy a house. When I bought my first house in 1971 I was on £2,500 pa as a Flying Officer (inc flying pay) and my house cost me £5,100 - say 2 years salary. The mortgage was easily manageable on my single salary (wife heavily pregnant thus not working).

I've just Googled prices for similar houses in that area and see they are around £180,000. I'm a little out of touch with service pay, but I'm guessing a Flying Officer isn't yet on £90k (no idea how much in fact) so buying a house is much tougher, so I'd approve of any help they can get, however little it may seem.

[Al R]

Can 2 SP in a qualifying relationship both apply for the relief on the same property?

[NutLoose]

Would it not be better simply to give them a low deposit or 100% mortgage scheme, as good as this scheme is it will mean they are paying both mortgage repayments and the loan back. Or even guarantee say 50 % of the deposit. I wonder if there are any time limits, in theory you could get a loan and be a civilian the following day.

Let's hope things have changed since my time, buying a house in the vicinity of the Station was a guarantee of a posting to the other side of the Country.

[acmech1954]

'guarantee of a posting to the other side of the Country'

Try other end as well, I arrived at Lossie mid eighties along with another guy from a Tanker squadron. We got talking and he came out with this story.

He had contacted Handbrake House to ask if he was on any posting shortlists, in turn they contacted Innsworth, and it was decreed that he was not on any lists. Within a few weks he and his wife (a WRAF) had found the house they wanted and started the buying trail. Eventually it got to the day of signing contracts which was duly done one morning -- on his return to the squadron at lunchtime he was told the boss wanted to see him, I think you can guess why. They put it back on the market without ever moving in!!!

[Onceapilot]

What annoyed me years ago was that the government gave council tenents something like a 30% market value discount on property they had rented. Nothing of that value has ever been offered to all service personel in the way of housing support, IMO.

OAP

[Melchett01]

buying a house in the vicinity of the Station was a guarantee of a posting to the other side of the Country.

It still is!

[Always a Sapper]

Hover

I'm not totally negative about the idea, far from it but in respect to my Junior Ranks comment I was thinking along the lines of the Army Private / Lance Jack rank range.

A Private (Range 1) is on a sliding scale (level 1 thru 7) ranging from £17,689 thru to £22,582 (not conting spec pay) he can not go any higher without promotion.

A Lance Jack (Range 1) is on a sliding scale (level 5 thru 9) ranging from £21,292 thru to £24,472)

Now, take tax into consideration, for ease and my poor math I'll make an assumption and a bit of a guess (Salary - 10k then 20% off the remainder) the figures do not take into account NI, council tax, utilities, food etc...

17k pays 1537/yr giving a rough take home of 16,152 or 1346/month.
22k pays 2516/yr giving a rough take home of 20,066 or 1672/month.
24k pays 2894/yr giving a rough take home of 21,578 or 1798/month.

The wife/partner you considered their wage on top, doesnt work in most cases. I assume you have never been posted and watched your wife in tears having just given up her hard earned and loved job (that took a long time to find) and now having to face the almost impossible task of getting another one in a garrison area where employers won't touch a Army wife simply because they will be moving in 3 years time on posting. I have, four times and trust me, it's heartbreaking but she did it every time because she loved me and wanted to be with me as a family. It only improved when she got employment with a national company and was able to transfer with them as I moved about. She was one of the really lucky ones in that respect when she got that job.

You can NOT consider a wifes salary in the Army, chances are she won't be working simply because there are no jobs available.

Now, take child care into account (they quite often have kids too) for her to work, the kids will need some form of childcare... this costs money, lots. Normal life would in general see the young family within spitting range of grandparents etc who will do the childcare thing when pushed and bribed by a smiley 2 year old, not many grandparents in a garrison town so it's the local childminder and corresponding bill.

I agree with the mortage figure in the order of 450 to 550/month having paid a deposit of 12.5k and the loan repayment taking it up to 650.

Now on the higher end at a potential take home of 1798/month you are looking at 33% of the potential take home but theres not that many Lance Jacks in the army and definatly not many on that rate.

Looking at the middle to lower ends of 1346 and 1672 then you are beginning to get in the 40% to 50% of salary. When you chuck in the other happy costs of life they would struggle.

It would be better for the loan to be spread over the whole mortage term that would help lower the monthly cost and make it better.

Further up the scale, better it gets.

[smujsmith]

All sounds a bit "jam tomorrow" to me. Perhaps others will remember the situation with "short toured" personnel after the Turkish invasion of the 70s. I was a newly married Jnr Tech, posted back from Akrotiri to Cranwell. I had a car, a tatty little Datsun 100A, on HP, and like many, did not have the money to pay it off. MOD said! have an interest free loan, repay it over a year or so, no worries. So I did, used what spare cash I had to get it back to blighty on Sir Galahad and was well proud of my purchase.

Two months after our car arrived back in the UK, I was called to "handbrake house" to be told that all deals were off, I had to repay the loan in full plus import duty. Suffice to say, I complied, sold the car and me, the wife and first child were to suffer perambulatory excursions for a year before we could afford to own a vehicle again. I just hope that this deal doesn't follow the same lines. Personally, if the pollies are behind it, I would be very wary !

[Al R]

AASapper,

Yes, and don't forget that in the second part of the Help to Buy programme which is just starting, the state will provide a 15% guarantee on a home to any homebuyer - but buyers must have a 5% deposit. I wonder how this advance will affect eligability. The guarantee can be used on a new build or existing home but if some SP will probably be staying 'put' (with the introduction of NEM), there are fears it could increase prices on houses already built.. instead of building new homes (one of the key targets of the plan).

In response to your points about 'service wives'.. damned right.

Modern Military Mother Sisters.. aren't doing it for themselves | Modern Military Mother (http://amodernmilitarymother.com/uncategorized/sisters-arent-doing-it-for-themselves)