They are to be offered interest- free loans from the Government to help them climb onto the housing ladder.



For the first time, service personnel who live in military accommodation will be allowed to apply for shared equity loans so they have enough money to buy a new home.

The interest-free Government money will be used by low-paid troops to top up a regular mortgage. In this way they would be able to obtain affordable housing when they leave barracks.

At the moment, a family who earns £40,000 in income can mostly afford a mortgage of around £160,000. By being allowed to participate in this new scheme, this figure would rise to £210,000.

Plans costing £10.2billion were unveiled recently and procedures will also be put in place to stop men and women in the services being discriminated against on the council housing waiting list.

Details revealed that they will now be judged to have a “local connection” in the locality in which they are based so that they won't be pushed down the queue for council housing.

In the aftermath of harsh criticism claiming that troops have been treated badly (where evidence suggests that because they were refused priority housing, thousands of ex- service personnel have effectively been made homeless and are sleeping rough), Ministers were quoted as saying that the new plans highlight the commitment of the Government to men and women in the British forces

The loans are to be made available under the Government's shared equity scheme, Open Market Home Buy which is already available to give more financial help to “keyworkers” such as teachers and nurses.

Because the loans will be offered by Local Government and the Department for Communities, in addition to lenders from the private sector, a large part of the debt will be interest-free.

The Open Market Home Buy scheme was announced in the budget earlier this year. In the past, these loans could only be used in blocks- namely of 32.5 per cent, 25 per cent or, if the loan was entirely Government funded, 17.5 per cent. What's more, borrowers used to be restricted to only one specific type of mortgage from each of the lenders (a total of three at that time).

The new, and revised, scheme provides much more flexibility on the percentage amount that can be borrowed – now at a top level of 50 per cent. In addition, there are two new products on offer:

MyChoiceHomeBuy is funded 50:50 by a group of eight Housing Associations named CHASE and by the Government. They offer an equity loan of 15 per cent to 50 per cent of the house price. This can be used alongside a conventional mortgage. Interest charges from year one are equal to 1.75 per cent of the value of the loan, payable monthly. The charge will rise annually by a figure equal to the Retail Price Index plus 1 per cent.

Ownhome can also be used in conjunction with a mortgage although initially, it must be through the Co-operative Bank. Provided in partnership with a Housing Association called Places for People and with Co-operative Financial Services (Co-op Bank), it offers an equity loan of between 20 per cent and 40 per cent. For the first five years there is no interest charged with Ownhome. From year six onwards, interest will be 1.75 per cent and from year 11, this will rise to 3.75 per cent.