House deposit Loan from employer?

ashp_2

Morning all,

My boss has kindly offered to help us with a deposit for our first house. This will be in the form of a loan. He is also going to increase my salary by 7k a year and I will pay the above loan back at 7k a year.
I will still get my current wage and once I have paid the loan back to work I will continue to get the extra 7k a year.

Between my partner and I we earn about 55k a year there will be a 7k a year increase on this. I'm wondering how the banks will view this?

We are going to get in touch with a mortgage adviser also.

AnotherJoe

ashp wrote: »

Morning all,

My boss has kindly offered to help us with a deposit for our first house. This will be in the form of a loan. He is also going to increase my salary by 7k a year and I will pay the above loan back at 7k a year.
I will still get my current wage and once I have paid the loan back to work I will continue to get the extra 7k a year.

Between my partner and I we earn about 55k a year there will be a 7k a year increase on this. I'm wondering how the banks will view this?

We are going to get in touch with a mortgage adviser also.

You'll need one. Most will view it very negatively, in effect you are looking for a 100% mortgage plus you have very large committed repayments on a loan. They won't take into account a future date when the repayments stop.

Do the figures you mention include tax? E.g. Your boss loans you, say £35k (£7k a year over 5 years). He pays you an extra £7k a year but after tax you'll get maybe £4-£5k so you are now, in terms of affordability as far as the mortgage is concerned, £2k a year worse off !

So, I genuinely wish you good luck but I think this cunning plan won't work.

ashp_2

Thanks for your advice.

We will not be any worse off. I'm not entirely sure how the loan will work yet but I am assuming I will pay tax on it. The 7k a year rise will be used to pay the loan off however long it takes it will not affect my current salary.

We both have very good credit records and no debt. We can easily afford the mortgage. I just am not sure how the lenders would view this loan.

I have had agreement in principle from Nat West & Halifax but I do take these with a pinch of salt as they do not know how we are getting the deposit!

csgohan4

you seriously need a broker for this. I would not recommend it via the loan from employer route as it is still borrowing for a deposit. But it's your choice obviously


If you earn that much why not save the traditional way avoiding any complex issues with this. Don't rush into buying or you will regret it

mrginge

ashp wrote: »

Thanks for your advice.

We will not be any worse off. I'm not entirely sure how the loan will work yet but I am assuming I will pay tax on it. The 7k a year rise will be used to pay the loan off however long it takes it will not affect my current salary.

We both have very good credit records and no debt. We can easily afford the mortgage. I just am not sure how the lenders would view this loan.

I have had agreement in principle from Nat West & Halifax but I do take these with a pinch of salt as they do not know how we are getting the deposit!

How much is this 'loan'?

What happens if you leave your job?

ashp_2

The loan would be 21000 and we would make this up to 23000 so we have a 10% deposit.

We obviously have no intention to leave our job (we both work for the same employer) but if this was to happen we would obviously be responsible for paying the loan back to my employer.

ashp_2

csgohan4 wrote: »

you seriously need a broker for this. I would not recommend it via the loan from employer route as it is still borrowing for a deposit. But it's your choice obviously


If you earn that much why not save the traditional way avoiding any complex issues with this. Don't rush into buying or you will regret it

I am now undecided really. We could wait a year and be in a better position but we have found a perfect house which needs some work and it's quite a bit cheaper than the majority of houses in this area.

I certainly don't want to rush into anything I just thought there may be lenders who may accept this kind of deposit.

AnotherJoe

ashp wrote: »

Thanks for your advice.

We will not be any worse off.
Can you explain why? I did say "from an affordability POV"

I'm not entirely sure how the loan will work yet then how can you say you wont be worse off from an affordability POV? If you dont know "how the loan will work" you dont know what the repayments are so you dont even know you wont be worse off, full stop.

but I am -->> assuming <<-- I will pay tax on it. The 7k a year rise will be used to pay the loan off however long it takes it will not affect my current salary. A £7k a year rise obviously will affect your salary !!! It will affect it by £7k!

We both have very good credit records and no debt. We can easily afford the mortgage. Thats your POV. A lender may disagree. I just am not sure how the lenders would view this loan. Negatively. Very negatively.

I have had agreement in principle from Nat West & Halifax but I do take these with a pinch of salt as they do not know how we are getting the deposit! Indeed, given that, they are irrelevant.

If you had told them, they'd likely hang up the phone since you've seriously misled them on your salary, and on any outstanding loans you have and what the repayments will be, and on the source of the deposit !!

Thrugelmir

Lenders will view this as a loan like any other. The fact that it's provider by your employer rather than a finance house, is also if anything even more negative.

AnotherJoe

Thrugelmir wrote: »

Lenders will view this as a loan like any other. The fact that it's provider by your employer rather than a finance house, is also if anything even more negative.

I understood they looked much more unfavourably upon a loan taken directly for the deposit, even if logically it is the same as any other loan?

Thrugelmir

AnotherJoe wrote: »

I understood they looked much more unfavourably upon a loan taken directly for the deposit, even if logically it is the same as any other loan?

While everyone think of what would happens if the employee were to leave service. There's also the remote possibility that the debt could be called in for some reason from the employers side.