Nationwide 2.5 tracker or Staff 0.5% with tax implications

jiggsygee

Hi,

I am hoping that somebody could give some advice on whether we should move mortgage or not.

We are currently with Nationwide on the SVR and have a rate of 2.5%, which is bound by terms and conditions. My partner works for Halifax and has been advised to take up the 0.5% base rate mortgage for staff, maximum 4 times income - about 115k. Which would leave us about £8k on a product (about 4%).

The problem is that there are tax implications with this mortgage, and we do not know what the future holds in terms of her employment.

So our options are

1. Stay 2.5% and hope the base rate does not rise

2. Move to partner's staff mortgage 0.5%, face tax implications ? and or job insecurity.

If anybody has had to make this decision, or knows what would be the best road to take, we would be extremely grateful.

Many Thanks,

dimbo61

First of all nationwide have 2 different SVR,s
The one you are on now is 2.5% and is 2% above the BOE base rate of 0.5% !!! Now the nationwide cant increase this rate because its tied into the BOE base rate which may well remain low for some time ( who knows)
the other SVR for new customers is now 3.99% and they can if they wish raise that !!!
I take it that the deal offered to your wife is 0.5% above base so 1% and you will have to pay tax on the SAVINGS you would make as the TAX man classes this as a perk from your wife,s employer.
Is it worth changing lender with all the costs involved ?
Best speaking to an accountant or IFA ( mortgage expert) to answer that one.
Me I would stay on the SVR of 2% above base and overpay once you have saviings in Cash ISA,s

Wh05apk

The "official" rate is 4% so you will be taxed as a benefit on the difference between that and what you are paying, so in this case 3% as a 20% taxpayer thats the equivilant of an extra 0.6% interest, making 1.6% in total, so still a good deal, provided you can retain it, obviiously once you switch you have then lost your 2.5% svr with N/W.

Also if you are remortgaging to Halifax staff will they pay the legal and val fees?

opinions4u

Basic rate tax would add 0.7% to the rate. 4% minus 0.5% = 3.5% x 20% tax.

Before fees, the HBOS scheme is much better. And, I believe, due to be replaced with an inferior offer.

You need to factor in the job security thing.

Wh05apk

opinions4u wrote: »

Basic rate tax would add 0.7% to the rate. 4% minus 0.5% = 3.5% x 20% tax.

Before fees, the HBOS scheme is much better. And, I believe, due to be replaced with an inferior offer.

You need to factor in the job security thing.

I thought the Halfax staff mortgage was base + 0.5%?

opinions4u

Wh05apk wrote: »

I thought the Halfax staff mortgage was base + 0.5%?

Base. They changed from a capped 5% about 8 years ago.

Dave_Ham

Pretty sure the Halifax staff rate is actually just the base rate (0.5%)

It will be better by a fair bit, but ensure you call the staff PAYE line at HMRC as no-one will prompt you and in 18 months you would otherwise get a big bill.

Legals are definitely free, not sure about valuation as cannot remember (think it is free)

As you are considering, it becomes a tie to the bank and therefore no decision can be taken likely.

All the best

missile

Seems like a great opportunity. What are the conditions if she is made redundant or leaves voluntarily?

Dave_Ham

Loses staff rate. If redundant think she would get a bit longer to utilise the rate, but depends in what circumstances.