Lloyds TSB Staff Mortgage Rates

chouchoutan

Hi there.

Just wondering if there are any Lloyds TSB staff out there who can let me know whether they offer any discounted rates on C&G mortgages to staff.

Thanks!

chouchoutan

Bump - anyone from Lloyds out there?

luckyfool

Staff mortgages are almost always a bad idea. Often they are more expensive than rates available from other lenders, and even then you still get taxed by the Inland Revenue on it as a benefit.

kerpob

Our staff rate is 3%

Is this still good compared to market, given benefit in kind tax.

chouchoutan

Just for a bit more background.

Our fixed rate mortgage with C&G ends in March when we'll move onto the SVR (which will be better than the fixed rate we're on at present). I work for another high street mortgage lender and they offer staff mortgages at BOE base rate - so currently 1.5%. We're likely to be in a bit of negative equity so moving the mortgage to them isn't an option at the moment.

However, the company I work for is 'merging' with Lloyds shortly and as my mortgage is with C&G I was wondering whether they offer a similar scheme to staff so I could get a low rate without having to move the debt.

If it's not possible it's not a major problem as we're not plannig on moving but obviously if I can save money I'd like to!

luckyfool

kerpob wrote: »

Our staff rate is 3%

Is this still good compared to market, given benefit in kind tax.

It's very good compared to new deals available just now, especially if it will fall further with yesterday's rate cut. However when you took it out it was probably a bad idea as you might have been able to get a Term Tracker at just over base rate. e.g. I have clients on term tracker with C&G at 0.17% over base rate (i.e. 1.67% from the end of January). So you could have a rate now of 1.67% without a big tax bill, whereas you are currently getting a worse rate of 3%, but getting taxed by the Inland Revenue as if you are "benefiting" from the difference between 3% and the average official loan rate for that year (i.e. for 07-08 that is apparently 6.25% link). So my understanding is on a £100,000 mortgage, at 3% you are paying tax on £3,250 of a benefit in kind. i.e.around £600-700 in income tax at basic rate.

Whether you are better coming out of that deal now depends on how close you could get to the 3% rate on currently available products. Will your employer allow you to switch to their SVR? Is the SVR going to cost you more than the tax bill would be? Of course you should get professional tax advice as I'm not an accountant!