Without a doubt the three main points of contact when re-mortgaging should be your mortgage broker, your solicitor and Unit HR Administrator. Your mortgage broker and legal advisor are there to act for you and make sure that everything runs smoothly with the money and legalities. Your Unit HR Administrator will be able to help you with any FHTB enquiries you may have and also will have the contact details for FHTB and where to send all of your documentation to. Please use these contacts, it is their job and will make your transaction so much easier. A solicitor and broker with experience in forces life or dealing with military personnel can be invaluable in terms of guiding you through the process with a real empathy and understanding of your position. Hannah Stockham, a specialist solicitor and Evolution Forces Families have teamed up to give you some information on the ins and outs of the process in this 5 part blog series.
For more information or advice on Forces help to buy or mortgages contact Evolution Forces Families on 0330 3322 614 firstname.lastname@example.org or Hannah Stockham for expert legal advice on 01372 237070 email@example.com
So here are some commonly asked questions…
We bought our first home in 2015 using the Forces Help to Buy scheme, are we allowed to re-mortgage it to buy a bigger one?
If you purchased a property with FHTB and then decide to buy a new one to be your main residence (i.e. you buy it to live in) regardless of if the new property is larger or smaller than the original one, the outstanding balance of the FHTB loan may be transferred to the new property as long as the old one is sold. This means that you can only use FHTB on one property and it must be the only one you own.
You will have to repay all of the FHTB before completing the purchase of the second property. This does not prevent you buying a second property, but it will mean you have to budget the repayment of the FHTB loan into your calculations when working out if you can afford to move.
If you chose to retain your main residence and buy a second property as a buy-to-let with a true buy-to-let mortgage, you can keep the FHTB loan on your original property.
Are there any extra fees associated with this?
If you wish to re-mortgage your old property and purchase a new one there will be a number of legal costs involved. These are discussed more fully below. There may also be financial implications with regards to higher stamp duty on your second property. You will also need to consider mortgage lenders costs and potentially a broker fee.
There is no charge for repaying the FHTB loan early.
Are there any restrictions that I need to consider?
Other than the restrictions already mentioned above, you are not permitted to use any of the FHTB money to buy a buy-to-let property, and no FHTB will be given to purchase a second property, regardless of the location, who will live there or its use.
You must also take into account any interest you may have in another property (i.e. you have helped your mother, brother, sister etc. buy a property and put your name on their mortgage or if you have inherited a property). If you have an interest in another property you must have removed your name from that property before completing any FHTB purchase. This means that property needs to have been sold or re-mortgaged into someone else’s name before you make an application to FHTB.
What issues may I be faced with? How can I overcome these?
The most important thing to consider when contemplating re-mortgaging a property or purchasing a new one is the cost and financial implications. It may seem like a good idea, but once you start considering your finances you may realise that it is not economically sensible or practical. You should always start by speaking with your financial advisor who will look at what solutions there are to your issue and whether re-mortgaging is the best resolution. Once you are sure of the financial position is it then wise to contact a solicitor who will be able to give you an estimate of costs, timings and advise you on anything which they consider may affect your decision. Once you have done all of the ground work it is then time to start looking at new mortgages or new properties.
Some key issues which occur frequently are:
- Forgetting that there are early repayment charges on mortgages.
- Forgetting that second properties attract higher rate SDLT (Stamp Duty Land Registry).
- Trying to get money freed up through a re-mortgage and not leaving enough time for the legal process.
- Not realising that everyone on the title to the property needs to be involved with the re-mortgage and/or transfer (i.e. even if you have an interest in your mother, brother or sister’s property you will need to be party to the legal and financial process. This will mean you will need to provide ID and sign documents. you should consider this carefully if you are on tour or posted abroad).
- Not realising that your legal advisor works for the mortgage company as well as you and therefore have obligations to the mortgage company. This may involve asking you questions about your current property which you think are irrelevant.
YOUR HOME MAY BE AT RISK IF YOU DO NOT KEEP UP REPAYMENTS ON IT.