NHS salary sacrifice mortgage impact

atlasmm

Hi,

Does anyone have any experience on how a car via salary sacrifice using the NHS Fleet Solutions scheme impacts a mortgage application?

Our initial application is sorted now and our house is due to complete in the coming weeks, therefore I am more thinking when it comes to remortgaging in 2 years time. 

Are remortgages affordability checked to the same level as initial applications?

The way I see it, it is no different to having a car on PCP however given the way the scheme works, the gross reduction in salary is much higher than the actual cost due to tax & NI savings. Would the lender treat the take home pay impact on the application as the monthly cost, or do they look at gross pay?

Thanks

Maka344

It’ll reduce your borrowing power like any other debt would. They look at both, and could take into account the gross reduction. 

ACG

The monthly deductions will go down as a commitment. 
If it is still affordable it will be fine, if not then it will be a problem.

However, if you are with a mainstream lender, you can usually do a Product transfer (PT) where no underwriting is needed. 

atlasmm

ACG said:

The monthly deductions will go down as a commitment. 
If it is still affordable it will be fine, if not then it will be a problem.

However, if you are with a mainstream lender, you can usually do a Product transfer (PT) where no underwriting is needed. 

Thanks for the response, I was unaware of product transfers but have just read up on them. 

Are they often quite a bit more expensive than remortgaging, or it it totally dependent on the situation at the time? Our mortgage is with Leeds BS. 

fergie_

You may wish to speak to your broker in advance as its potentially a material change to your circumstances (reduction in pay).

Windofchange

Once you’re with a lender then you’re with a lender. They can’t just get rid of you (well assuming you don’t default of course), so you’ll be put onto the SVR, and as above you’ll be offered a product transfer shortly before your fixed term ends. How this will stack up against the best deal who knows. We were initially with Halifax, but the best rate they offered us was about 1% more than market best, so we switched through our broker. Car finance will have no impact on you unless it pushes your affordability out, so depends how close to the wire you will be in two years time. 

Maka344

When we looked at this, a Tesla Model Y via the scheme was around a £1200 monthly gross reduction. That would have impacted our affordability. 

ACG

atlasmm said:

ACG said:

The monthly deductions will go down as a commitment. 
If it is still affordable it will be fine, if not then it will be a problem.

However, if you are with a mainstream lender, you can usually do a Product transfer (PT) where no underwriting is needed. 

Thanks for the response, I was unaware of product transfers but have just read up on them. 

Are they often quite a bit more expensive than remortgaging, or it it totally dependent on the situation at the time? Our mortgage is with Leeds BS. 

Usually a PT is a little more expensive than the best buys. My mortgage is with virgin money, their PT rates are typically around 0.5% above the market.