LSAP advice please...

Discussion in 'Army Pay, Claims & JPA' started by chamooooone, Mar 3, 2012.

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  1. I'm just after a little advice really, I'm about to buy my first place - a nice little 2 bed flat which I've just offered £80k for - and I'm thinking about applying for LSAP. I currently have a loan with the bank that has 2.5 years to run but if I were to settle now it'd cost me about £10k. It currently costs me about £375 a month. I'm returning from tour shortly and will have about £12k saved up. My question is, do I use the £12k for a 15% deposit and keep the loan or do I pay the loan off and get LSAP to pay for a 10% deposit? The mortgage by the way is going to be in the region of £400 a month for a 15% deposit and about £80 more for a 10% deposit. I can afford the loan and the mortgage repayments but would rather not unless that is definitely the best way to go.

    Any helpful advice would be appreciated.

  2. That depends upon the small print for the loan. Most loans are structured such that your charges have already been paid. If you pay off the loan early, it will be the bank that makes the money and not you. You could try contacting them and asking how much they want to settle the loan, although I recognise that is a bit difficult when you are on tour!

    On the limited information provided, I reckon you should keep the loan going and pay as much upfront for the property as you can. Remember that there are other costs associated with property and you will need a contingency fund in case something goes wrong (and it will...). The £375/mth that you currently pay for the loan will come in useful when the loan is paid off in two year's time and interest rates are rising sharply.

    This is where a computer spreadsheet comes into its own; blag a laptop from someone and create a spreadsheet to compare your different options.

    The LSAP is a different animal which has been discussed in detail elsewhere on this site. I looked at it when I bought a house and decided not to use it (I was lucky enough not to need it, too).

    I would question whether you need to buy a property right now. Are you planning to leave soon?

  3. Litotes,

    Thank you that was the sort of advice I was after, I should've mentioned that I'm currently on R&R (the very last slot available to us) so speaking to the bank isn't a problem. £10k is what they want to settle it, if I carried on paying as is I would end up paying just short of £13k with the interest (I didn't get a very good rate).

    I'm looking now because property is cheap these days and I can't see a reason not to get a little place that I can call my own. I have no plans to get out yet, I still have over 9 years left but I'm sick of going home and staying at my parents, I'm 30 years old, it's just silly now!

    I think your right though, I'll leave the LSAP and try to get a bigger chunk of the property. It's only 2.5 years then I'll be laughing, I hope. And at least then I don't become one of the horror stories that I read about on the LSAP thread.

    Thanks again mate.

  4. Hi
    I believe that a LSAP over £5K is liable for taxing, so although you get enough for a 10% deposit it will cost you more in the long run, they will recoup 10% of the loan per year and if you get out before the loan is paid back in full, the full balance outstanding is taken straight away from your last pay if there is still more to pay then look to loose it as a debt for immediate repayment.

    I got a LSAP when I bought my place and forgot about the payback at the end, so was up the creek when i got my final -£ pay statement and still had bills to pay.

    Things may have changed over the last few years with regards to it so if I am wrong I am sorry.

    Good luck
  5. Whilst you are still serving, owning a property can be a real hassle unless you are living in it. We are no longer in the 90s with cheap finance and rising property prices. Beware!

    If you are not spreadsheet literate, give me the financial details of the loan on here (monthly payment, amount outstanding, length of time left and the bank's offer) and I can see if I can work out which option would be cheaper.

  6. It's ok mate I'm more than happy with spreadsheets. I've just had the offer for the flat accepted and I've decided not to pay off the loan. It'll be quicker and simpler if I just keep that ticking over rather than go down the LSAP route. My cousin is just about to get kicked out of the room he is renting from his brother so he is now going to move in with me and go halves on everything which will make things a bit cheaper too.

    Thanks again for the advice,

    • Like Like x 1
  7. Good Luck!