Armed Forces personnel to switch mortgages free of charge

By Anita Jaynes on 12 February, 2016

 Jeremy Morcumb of Mortgage Advice Bureau Swindon discusses the latest help dedicated to armed forces personnel.

Being at work whilst having worries at home is stressful at the best of times, even more so when you job consists of spending time abroad fighting for your country.

That’s why it comes as good news that members of the Armed Forces that are posted overseas can now rent out their properties back home without switching their residential mortgages to let-to-buy mortgages, saving them thousands of pounds in additional fees.

Thanks to extra support from the Ministry of Defense (MoD) and the British Bankers Association (BBA), the scheme is expected to help around 265,000 people, with BBA chief, Anthony Browne, explaining that it will ensure that service personnel and their families are ‘not disadvantaged for working abroad’.

Why are you charged for switching a mortgage, even though it’s only to rent out the property for a period of time?

Firstly, if you stop living in a property that you own, for any period of time, you must disclose this to your lender immediately.
A majority of lenders will want reassurance that this was not your plan all along, that you didn’t initially buy the property just to let it out in the future and that it is down to genuine circumstance that you have had to rent it out.

There are some lenders that offer a ‘consent to let’ which allows you to switch your current mortgage to a let-to-buy so you can rent it out whilst not living there.

However, some lenders may instead charge a fee to switch, which is where the problem lies with armed forces personnel.
Prolonged periods of time spent out of the country can also, somewhat harshly, affect armed forces personnel’s credit ratings, and will often mean that they lose out on the opportunity to claim bonuses and insurance discounts.

The news comes nearly two years after the Forces: Help to Buy scheme was introduced, which is something where servicemen and servicewomen are able to borrow up to 50% of their salary, interest-free, to buy their first home or move to another property.
And with this latest announcement, it’s certainly refreshing see the financial sector supporting the Armed Forces Covenant – they protect our country and we should protect them.

Jeremy Morcumb is from Mortgage Advice Bureau in Swindon – for further information call: 01793 611400

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Pictured above: Jeremy Morcumb of Mortgage Advice Bureau in Swindon