We'd like to remind Forumites to please avoid political debate on the Forum. This is to keep it a safe and useful space for MoneySaving discussions. Threads that are - or become - political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.
We're aware that dates on the Forum are not currently showing correctly. Please bear with us while we get this fixed, and see Site feedback for updates.

Staff Mortgage or Market Mortgage

I work with a UK Bank <cough>bailed out by the UK government </cough> and there is the possibility to apply for a staff mortgage.
I was considering taking a 2Year Fixed @4.79%. A similar product is offered by the bank to customer @5.69%.

However, if one takes an employer mortage, they have to pay BIK on the difference between the official rate quoted by HRMC and the rate they pay. At the moment that rate is 4.75%.

My worry is that HRMC can raise this rate as they wish, and theoretically they can do it even if BOE keep the rates on hold.

Opinions ?

Does anyone have a similar experience with this, are the banks more lax when they deal with employees ? (in theory they claim they scrutinize these application as they would deal with any external application)

Comments

  • opinions4u
    opinions4u Posts: 19,411 Forumite
    edited 22 August 2009 pm31 12:26PM
    If the staff cheapo rate is more than the HMRC rate then no tax is due.

    If you pay your tax at 20% then you would need the HMRC rate to be 9.79% to pay a tax of 1% of the mortgage (9.79% - 4.79% = 5% x 20% tax rate = 1%).

    So unlikely to make you worse off than you would be if you had the public offer.

    My experience is that banks are usually stricter when lending to employees. Never lax.
  • oli_ro
    oli_ro Posts: 142 Forumite
    Well, thanks for the reply.
    I am a high rate tax payer, so the HRMC will have to raise their rate to 7.29% in order for the 2 deals to be equivalent. However, on the staff mortgage there is no arrangement fee, so I am tempted to try that.
  • opinions4u
    opinions4u Posts: 19,411 Forumite
    The irony is that with all the stick the lenders get for not cutting rates, the HMRC rate has only dropped from 6.25% to 4.75%.

    Not quite the 5.5% to 0.5% of the BofE base rate ;) .
This discussion has been closed.
Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 348.4K Banking & Borrowing
  • 252.1K Reduce Debt & Boost Income
  • 452.4K Spending & Discounts
  • 241K Work, Benefits & Business
  • 617.3K Mortgages, Homes & Bills
  • 175.7K Life & Family
  • 254.2K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16K Discuss & Feedback
  • 15.1K Coronavirus Support Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.