Bank employee mortgages

JoseChungsDoomsday

I was recently reading that only a few banks offer their staff 'cheap' mortgages due to on going costs and tax implications and it got me wondering what it was they offered.

Does anyone know what type of deals banks offer their staff?

Davy_Jones_II

I work for one of the big high street names and they offer us nothing.

It’s conceivable that being staff skews the lending decision, I suppose, but there’s certainly no better rate or different terms on offer.

Thrugelmir

The current tax implications on Benefits in Kind for employees negate any benefit on offer due to the currently low level of interest rates.

justjohn

Many banks offer carp discounts to staff members. Staff often use other banks for there mortgage.(Lloyds and nationwide give guff discounts)

[Deleted User]

To comply with MCOB all parties to the mortgage (which may also include a non-staff borrower) will need to be assessed just as any other application - in terms of credit scoring/adverse/lending limits etc.

So it can't just be an employee 'benefit' to offer say an un-competitive 4% but make it a "free-for-all" for staff members meaning cases where one party has defaults etc. get through! (which could be a very big employee benefit - maybe pre-MCOB it was like this!?)

P11D rules & NI/Tax deductions will apply if lenders offer anything low cost (below HMRC "official interest rate": 2.5% currently) which isn't available to the public.

Not sure how a 95% loan @ 2.5% would play out - that's lower than what's available to Joe Public, but equal to the HMRC interest rate. The issue would be the bank's very small margin for such a high risk loan.

Drop it down to 90% and market rates easily beat 2.5%.

Even offering something crazy like 1.5% @ 90% would be pushing it for the employee to actually save any money when you factor in tax. So just not worth the hassle. Employer also unlikely to make much money, so will just not offer anything and staff can apply direct at market rates to avoid all the paperwork etc.

As Davy states, if Underwriter discretion does come in around document requirements/history etc. it could well 'sway' the decision, but officially - no change to usual, so no benefit there!

I've never been involved in a staff loan, but imagine the work & rationale etc. for approving it would have to be even more robust than normal - particularly if the Underwriter was looking to use significant amounts of discretion/flexibility!

JGB1955

Back in the 80s, when mortgage rates reached 18% for some, we had a staff mortgage with Nat West. The rate was fixed at 5%, so was s real perk, despite being taxed on the benefit. Mortgage rates are so low now, it wouldn't be worth the banks (or employees) while offering a discount..

Old_Lifer

A cheap mortgage offered to staff by a financial institution was common and a useful perk years ago.


I had a few friends in banking and I think a common rate was two and a half percent with most banks but I think this was increased to five per cent around the mid-70s.

[Deleted User]

When i used to work for Halifax we got a base rate mortgage up to 4x the staff members income and then any extra borrowing has to be on public rates.

It was ok for a while but then public rates dropped significantly and HMRC's rate they used for calculating benefit in kind charged so much tax that I ended up ditching it and moving to public rates.

This was a good while ago though. A lot could have changed

Goldiegirl

JGB1955 wrote: »

Back in the 80s, when mortgage rates reached 18% for some, we had a staff mortgage with Nat West. The rate was fixed at 5%, so was s real perk, despite being taxed on the benefit. Mortgage rates are so low now, it wouldn't be worth the banks (or employees) while offering a discount..

This was similar to the Halifax, at the time.

The amount on staff rate was fixed depending on what grade you were, and anything over that was on the public rate. However, it was still a massive perk, even with the tax liability.

Deleted_User wrote: »

When i used to work for Halifax we got a base rate mortgage up to 4x the staff members income and then any extra borrowing has to be on public rates.

It was ok for a while but then public rates dropped significantly and HMRC's rate they used for calculating benefit in kind charged so much tax that I ended up ditching it and moving to public rates.

This was a good while ago though. A lot could have changed

When interest rates dropped, previous staff mortgage was less attractive, so the Halifax introduced this scheme. I transferred my mortgage on to the new scheme, as it saved me about £100 per month.

I was made redundant from the Halifax in 2009, and was able to keep the staff rate for a year, then I repaid the mortgage in full.

These days, rates are so low, I don't think staff mortgages are much of a perk anymore, when the tax liability is factored in as well

Brock_and_Roll

Naff all these days

bigisi

Goldiegirl wrote: »

I was made redundant from the Halifax in 2009, and was able to keep the staff rate for a year, then I repaid the mortgage in full.

Same although I left late 2008. They forgot about me though and it wasn't until 2016 they realised and took it off me

Thanks Halifax!