01243 817777 hello@talktotrinity.com
Info / News

Mortgages for the Military: How to rent out your property in the armed forces?

With 64% of those serving in the military owning a home, renting your property may be something worth considering if you are deployed overseas. Read our latest guide for advice on military mortgages and renting out your home

With accommodation provided when posted overseas, renting out a property therefore offers those in the military a potential and valuable additional income stream. As such, in this guide we’ll provide an overview of what you need to know when renting out your house, including key information on mortgages with military benefits.

Trinity Email Headers Final 9 | Trinity Insurance

While there are not specific mortgages for those in the armed forces, mortgage lenders for the military instead utilise different criteria for those currently serving, in order to tailor the product to those in the armed forces. The precise extent of their flexibility depends on the specific nature of that mortgage product, however, if you are a member of the military you can benefit from increased flexibility with both your eligibility as well conditions applying to your property once you’re a homeowner. Some lenders may offer ‘consent to let’ for example if you were to be deployed, allowing you to rent out your home for a short period of time.

Why might military personnel need specialist mortgage advice?

Due to the unique nature of military life, those in the armed forces may find it challenging attaining a standard mortgage. For example, when applying for a standard mortgage, lender affordability checks could be a problem due to lower income and different financial histories compared to civilians and some lenders may not understand BFPO addresses

You may also have a poor credit rating due to a lack of monthly direct debits and fixed address records which could affect your loan eligibility criteria.

As such it may be worth searching for a broker with a specialism in military personnel or speaking to lenders about their processes for military.

What flexibility can you expect when taking out a mortgage for the armed forces?

Firstly, the lenders tend to be more flexible, allowing you to purchase a property while posted overseas or even rent your property while stationed elsewhere without attaining a buy-to-let mortgage. Such lenders understand the circumstances that those face in the military and therefore offer adapted lending criteria to help armed forces servicemen and servicewomen to get a mortgage approved.

The second key difference is in the way they accommodate the Forces Help to Buy scheme. The initiative allows military personnel to buy a first property, even if you do not have a deposit by borrowing up to 50% of their salary interest-free. As mortgage brokers calculate how much you can borrow, using a multiplier of 4.5 for your annual salary, this would therefore allow someone serving on £40,000 per year the ability to purchase a £200,000 house, courtesy of a £20,000 Deposit from a Help To Buy Loan.

To be eligible for the scheme you need to:

  • Have completed a minimum length of service
  • Have at least 6 months remaining to serve
  • Not fall within certain medical categories.

Please note there is a maximum Forces Help to Buy limit of £25,000, even if 50% of your annual salary is more than this amount. Always ensure you get advice and support from a Mortgage advisor, by checking the FCA register to see if your mortgage broker is regulated.  

Requirements when taking out a mortgage in the military

Although the specifics of your circumstances will be taken into account when dealing with a mortgage specialist, a bad credit history, County Court Judgements or bankruptcy will seriously affect your chances of being accepted. Also bear in mind that the Forces Help to Buy scheme is only available to people who have at least six months of service remaining.

You’ll also need the correct documentation; a form of ID, proof of address, proof of income, bank statements and any other documents that the lender requests. Most lenders will require at least 3 months’ worth of payslips to evidence income and 3-6 months of bank statements to review outgoings. And don’t forget that a bigger deposit doesn’t only save you money in paying less interest overall; it could also lead to you being offered a lower interest rate in the first place.

In recent years, the mortgage market has become increasingly aware of the challenges to home ownership that a career in the armed forces can present and has reacted accordingly. The result of this is an array of different options which can help you to take your first steps onto the property ladder. Just as a career in the military isn’t like a career anywhere else, a taking out a mortgage in the military is different also. As such its always recommended to choose a lender or use a broker that truly understands the unique lives of the military community.

Are there any alternatives to a standard mortgage?

Alternatively, you may opt for a buy-to-let mortgage if you’re purchasing a property specifically to rent, however please note you cannot use the help to buy scheme for a purchase of this nature.

There are many different types of buy-to-let mortgages therefore offering a range of options for those looking to secure a home for your future use or to invest in real estate solely for rental purposes.

Home insurance is really important for your main home and there are many alternatives if you are renting out a property. With most insurance policies having a standard clause requiring your home to not  be left unoccupied for more than 90 days a year, it’s important to check your buildings and contents insurance policy, particularly if you are deployed and plan to leave it empty. You should also check your policy to confrim if you cover extends to non family members living at the property.  

What about home insurance?

At Trinity our buildings and contents insurance is built for serving personnel with insurance for military kit on top of your buildings and contents cover, so there is no need for a separate policy. You are also covered for your contents if you live away from your main home during the week on camp.

For those renting a room out, most standard policies will cover you for anyone lodging there, however it’s important to let your insurance company know if someone else is living in your property that isn’t a family member. A standard residential buildings and contents policy won’t cover tenants however some policies may allow for AirBnB holiday lets on a short term basis. Always read your policy carefully so you understand what you are covered for and always check if you are unsure so your insurance meets your needs

Can civilians rent military housing?

How do I rent my house to the military?

Whoever you decide to rent to, your obligations will be broadly be the same. The first step would be to contact your mortgage provider,even if your mortgage has military benefits your existing residential mortgage is likely have restrictions on letting the property out. You will therefore need to weigh up whether a buy-to-let mortgage at a different interest rate (and potentially a higher deposit payment) is viable. The risks of a buy-to-let property for example are very different to those that come with a normal residential property and therefore extra costs are likely to be incurred.

You’ll also need to ensure that your home meets renting legal requirements and that you’re up to speed with the potential tax implications.

You’ll also need to prepare the legal documents for any tenancy and to be aware of what you need to do with any deposit you charge.

Once they’re in place, you should remember that renters will need a way of contacting you, and that they have legal rights that you’ll need to fulfil. Being a landlord can be financially rewarding however comes with a number of complications and therefore its always worth speaking to professionals before undertaking any major decisions.