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CML supports new guidance for servicemen and women seeking a mortgage


Published: 5 February 2014 | Author: Bernard Clarke

The Ministry of Defence (MoD) has just re-issued its guidance to help members of the armed forces when they apply for a mortgage. This has been produced with input from the CML and the Building Societies Association.

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 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.

Further information on buying a property, aimed specifically at members of the armed forces, are available on a dedicated section of the MoD-supported website One interesting snippet from this website reveals (from the Armed Forces Continuous Attitude Survey 2012) that 59% of Royal Navy personnel own their own home, closely followed by the RAF (55%). The Army trails on 33%, with the Royal Marines in the middle at 46%.

Meanwhile, alongside the helpful information on applying for a mortgage, service personnel have also been given guidance on applying for unsecured credit, with input from the British Bankers' Association, the Finance & Leasing Association and the UK Cards Association.