Mortgage - Staff rate

l0u1se

May sound like a bit of a stupid question, I currently work for a financial institution and I am able to benefit from a staff rate mortgage which is the base rate. I can borrow 3.5x my salary on this rate and the rest would be 3.5x my partners salary at a normal rate (not one of the cheapest out there but not extortionate)

The mortgage also requires a 10% deposit

I was wondering if there is any point in bothering seeing a mortgage broker to see if any better deals are available?

For the mortgage we need roughly 60% would be based on my salary and 40% on my partners

ACG

I can borrow 3.5x my salary on this rate and the rest would be 3.5x my partners salary at a normal rate

Are you sure you have got that right?
It does not make sense to have 2 different rates on the same mortgage.

Also, you need to double check but when i worked for RBS i was offered a staff rate mortgage but you have to pay some sort of tax on it so it effectively cancels out any discount you get. Things may have changed since then but its worth considering.

Its always worth speaking to a broker. If they can save you money, great. If they cant, you have spent an hour or 2 trying to save money - no huge loss.

dean00_0

Rbs don't offer staff rate or subsidy anymore

TrickyDicky101

Sounds like an OK deal to me assuming the partner's rate is not too high. You will suffer a benefit-in-kind (BiK) of (4% - rate you pay)*your highest marginal rate (if you are a lower rate taxpayer then that is 20% of 3.5% making this still a very attractive rate - it still is even if a higher rate payer).

HapPea

You will be taxed on the difference between the official rate (4%) and the rate that you are paying. This is applicable to both the 60% on 0.5% and the 40% on the Standard product (if this is less than 4%). You'll also need to check the fee applicable.

However it's worth noting that with a rate of just 0.5% you'll be paying off a lot of capital so make sure the broker takes this into consideration. Also the taxable amount will decrease as you pay off the capital (assuming the official and Base Rates stay the same))

It sounds similar to the LBG mortgage, but with that you can get up to 4x your salary capped at £200K

Goldiegirl

ACG wrote: »

Are you sure you have got that right?
It does not make sense to have 2 different rates on the same mortgage.

Also, you need to double check but when i worked for RBS i was offered a staff rate mortgage but you have to pay some sort of tax on it so it effectively cancels out any discount you get. Things may have changed since then but its worth considering.

Its always worth speaking to a broker. If they can save you money, great. If they cant, you have spent an hour or 2 trying to save money - no huge loss.

When I worked for a lender, I had a staff mortgage.

It was a joint mortgage, and the amount we borrowed was calculated on our joint income. However, I was eligible for a staff mortgage limit of £49000 (this was 25 years ago). So £49000 was on the staff rate, and the remainder of the mortgage was on the public SVR. So it is certainly possible for part of the mortgage to be on the staff rate, and part on a public rate.

The staff member has to pay tax on the value of the benefit they receive by having a staff mortgage.

In days gone by, when the public mortgage rates were high, there was a considerable saving in having a staff mortgage, even taking into account the extra tax that had to be paid.

In these days of lower interest rates, there probably isn't much difference. I would certainly investigate other mortgages before making my decision

ACG

Goldiegirl wrote: »

However, I was eligible for a staff mortgage limit of £49000 (this was 25 years ago). So £49000 was on the staff rate, and the remainder of the mortgage was on the public SVR. So it is certainly possible for part of the mortgage to be on the staff rate, and part on a public rate.

I have worked for 2 banks and that was not the case with either which is why i thought it may have been wrong. Thanks for the info, certainly something to bare in mind if i get a similar situation with a client.

getmore4less

you will need to do the number

a good non staff rate may come close if the xtra has to be on the SVR

check what happens if you leave or get made redundant.

Wh05apk

If you are looking at a 90% deal which it appears you are, even taking the tax element into account it initially appears good, however, you may find once the LTV gets attractive as you repay the capital, and hopefully the property value increases, the advantage reduces as other lenders remortgage deals may become more beneficial.

l0u1se

I understand- thanks so much for all the replies, they are all appreciated...there are so many things to consider - I'm so naive sometimes. It is LBG that I work for. It would definitely only be my salary that is taken into account when it comes to staff rate.