Loans for Members of HM Forces

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If you're in the services, it can sometimes be difficult to find a loan due to the special circumstances of your employment.

This can be a source of great frustration for servicemen and women who hold responsible positions, often in charge of many people or equipment worth millions, who then find themselves unable to get a loan of a few hundreds of pounds.

Why is this? Contrary to popular opinion, it's not because the lenders are inherently biased or prejudiced against members of the Armed Forces. The problem arises mainly because of the unique demands that the services put on their members.

There are not many civilian careers that require their participants to uproot regularly at periods ranging from a few months to a few years, and move to anywhere from the other end of the country to the other side of the world!

This need to move frequently can sometimes cause a problem, in that it can prevent service personnel from building up a good credit history as quickly as they might in a more settled career.

Accomodation is often 'on camp' or rented rather than purchased, electoral information may not be kept up to date, phone and utility accounts may be absent - all these things may have a bearing on your ability to get credit.

Unsecured Loan

HM Forces loan The main loan option open to members of HM Forces is an Unsecured/Personal Loan. This is a loan which is not secured on property. An Unsecured loan lets you borrow money without offering security to the lender, but you are of course still liable to repay the loan.

Because of the greater risk to the lender, a Personal or Unsecured loan is generally more expensive than a Secured loan and it can also be more difficult to find if you've had problems with your credit record, or if you've just started work.

Your loan application will be judged on your ability to repay the loan - your earnings and bank and credit history will be important.

However, there are lenders who specialise in offering competitive rates to tenants, including members of HM Forces, and a bad credit history does not necessarily prove an obstacle. We can't guarantee that you'll get a loan but all cases are considered as sympathetically as possible.

On the positive side, an Unsecured Loan can be arranged with the minimum of paperwork and can also be paid out much more quickly than a Secured Loan, as there is no need to wait for a survey or valuation of property. In some cases, it's possible to get the money paid out within a couple of days.

Interest rates - variable or fixed

There are reputable lenders that deal with service personnel but it's important to shop around. The web makes this easy to do no matter where you are. When you are searching for a loan ensure that you are dealing with a reputable company with the appropriate consumer credit licence and ask the following questions:

What is the APR (annual percentage rate)?
What will the monthly repayments be?
How much will I have to repay in total?

Don't try to get a loan by sending off multiple applications to lenders if they require your approval in advance for a credit search. Each time you are credit searched, a 'footprint' is left on your credit file, and too many searches will set lenders wondering if you are in financial difficulties.

If you're not sure about your credit history, you can obtain a copy of your report on line for a fee - an enquiry of this type won't adversely affect any application you may be considering.

HM Forces Mortgage

Many service personnel worry about getting on the property ladder, especially with the recent escalating house prices - you can feel left behind in the booming property market. It may be worth considering buying-to-let.

When you leave the forces you will need somewhere to live and many leave it until then to arrange a mortgage, avoiding the hassle of re-selling everytime you move. However, with property price hikes it can be worrying as to whether you will be able to afford the price of the type of house you want when you leave the services.

There is also a recognised shortage of housing for sale and rental throughout the UK, so if you leave it too late you can find yourself in difficulty, or on a waiting list for a rental property or council accomodation. There are specialist Buy to Let mortgage lenders who can advise on finding the best option for you.

The advantage for forces personnel is that you can invest in a property, live in it while you are working in the area then rent it out when you are posted. The rental fee should preferably cover your mortgage, and you will still have the potential capital gain from the property.

In addition to these advantages, getting a foot on the property ladder takes off the pressure and worry about what happens when you leave the services.

It is important to research your chosen area carefully before you buy. The property does not need to be your ideal home, it needs to appeal to a prospective tenant. Generally, smaller properties in urban areas are popular, but you will need to check the local area to find what is in greatest demand.

Remember, it is important to realise the costs involved and to have a contingency plan just in case you are unable to rent out the property for some months - you would have to fund the mortgage, possible fees for an agency and maintenance costs.

More about buying a house

Help with Debt

If you're thinking about borrowing to consolidate existing debt, it's worth taking some independent advice before you make any further financial commitments. There may be alternatives to taking out additional borrowing which you hadn't considered.

If you are in the forces and are experiencing financial problems, the Royal British Legion offers grants and loans to current and ex-members of the services for a variety of purposes. If you have left the forces, are unemployed and are thinking of setting up in business for yourself, the RBLA can offer financial help and advice.

The Soldiers, Sailors, Airmen and Families Association (SSAFA) also offer a confidential support line where you can talk to a sympathetic volunteer on a variety of subjects including debt. They are also usually able to give debt advice to ex-servicemen and women and dependents.

Don't forget as well, that you can get unbiased debt and finance advice from the Citizens Advice Bureau and the Insolvency Helpline in the UK. As always, the best course of advice when dealing with debt is to get as much good quality information and advice as possible, before making any decisions.

Finally, don't be tempted to leave things too long hoping that 'something willl turn up' - it's generally best to tackle money problems sooner rather than later.

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