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Staff Mortgage or Market Mortgage

oli_ro
Posts: 142 Forumite
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)
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)
0
Comments
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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.0 -
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.0 -
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.
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