How it works

The Armed Forces Home Ownership Scheme enables qualifying Service personnel to purchase a property on the open market suitable for their needs up to a maximum value of £300,000, with a conventional mortgage and with help from the Homes & Communities Agency (HCA) in the form of an equity loan secured against the property as a Second Charge (the AFHOS Equity Loan).

The HCA has an entitlement to a share of the future sale proceeds equal to the percentage contribution provided to assist buyers.

This enables eligible Service personnel to take out an affordable high street mortgage (minimum 50% and maximum 85% of the total purchase price when added to any deposit contributed by the buyer) on which they make repayments in the normal way. The rest of the purchase price will be paid for with a contribution from the HCA secured by a Second Charge. The maximum amount that the Second Charge can be is £75,000.

There are no interest payments to pay on the Second Charge whilst you remain a regular serving member of the Armed Forces. However, if you leave the Armed Forces or you die in Service, you (or your surviving joint mortgagee, where you buy with someone else, or your estate) will be liable to pay monthly fees calculated against the value of the Second Charge:

No fee to pay on the equity loan for the first year
From the beginning of year 2: 2% below the Standard Variable Rate of Royal Bank of Scotland (SVR-RBS)
From the start of year 3: 1% below the (SVR-RBS)
From the start of year 4: Standard Variable Rate (SVR-RBS)
From the start of year 5: 1% above the (SVR-RBS)
From the start of year 6 and thereafter 2% above the (SVR-RBS).

The Homes and Communities Agency may also at any point after you leave active Service or die require repayment of the Second Charge.

Submit an application online now!