Previously, members of the military who rented out their homes during deployment would be forced to change their residential mortgage to a buy-to-let mortgage. This often resulted in new charges and an increased rate of interest.
Under this new agreement however, they will be able to retain their property’s residential mortgage and avoid unnecessary outlay.
Almost 265,000 people in the UK and Ireland are set to benefit from the change that was announced on Boxing Day, as part of the Armed Forces Covenant, which the government enshrined in law as a promise from the nation that the Forces community is treated fairly.
“Our Armed Forces keep us safe and rightly we should be making sure they’re fully supported,” said defence minister Mark Lancaster.
“This extension means our brave men and women will save time and money when they are fulfilling vital roles across the country and is another example of how the Covenant is making a real difference.”
Support from banks
The new measure is supported by almost 50 UK banks and building societies, including Barclays, HSBC and Nationwide.
Anthony Browne, CEO of the British Bankers’ Association, said it was only right that the banks look after members of the Armed Forces who work all over the world to ensure Britain’s safety.
“The extra support provided by the main mortgage providers will make sure service personnel and their families are not disadvantaged when they are required to work away from home and want to rent out their house, and make their mortgages fairer,” he commented.
The announcement comes not long after the publication of the Covenant Annual Report, which highlighted achievements from the past 12 months and outlined targets for the coming year.
In the report, the Ministry of Defence announced the extension of the Forces Help to Buy scheme to 2018, benefiting over 9,000 personnel to the sum of approximately £136 million.
The bulk of the UK’s motor insurance industry (86 per cent) also agreed to waive cancellation fees and preserve no claims discounts for up to three years when personnel and their families are posted abroad.