Staff Loans

blaise802001

Hi. Just wondering if anyone knows how staff loans are considered when looking to remortgage. Every year I take advantage of the interest free staff loan through work. I currently pay back £291 which is due to finish in January. 

My next one has overlapped and first payment starts in November until Oct 25. 

I have just put my house on the market and looking at affordability. I didn’t think to mention these to my broker as they are not loans as such. They are deducted from my salary every month. So currently it will look as though as I have 516 a month from my salary. 

However this is only till Jan when it drops to £225. 

Do mortgage lenders look at this as loan repayment or similar to salary advance? 

Thank you 

Hoenir

It's a loan and needs to be declared as such. 

ACG

The underwriter will ask about them. The one that ends in January will most likely be ignored unless you have applied to one of 3-4 lenders who will likely count both of them. Most lenders will only count the one that will run until late next year. 

It is a loan.

The broker should have picked up on it really but I would mention it to them sooner rather than later. 

Bigphil1474

Not sure about the legal's of it - my employer is offering a wage advance, repayable after 3 months, and then over 9 months. They can't call it a loan as they aren't allowed to give loans, but it's an interest free advance of wages. I suspect for mortgage purposes it might be treated as a loan though. Do you just bank it in an interest paying account or is it actually spent on things?

blaise802001

Bigphil1474 said:

Do you just bank it in an interest paying account or is it actually spent on things?

Hi. As it’s interest free I just bank it as they’re in ISAs etc. I have about 16k in savings. But then me and my partner have about £13k on credit cards but a joint income of £90k.
if they lender were to consider my “advances” as loans then then I imagine it would drop our affordability somewhat

for context we are on looking to lend around £160k on an 240k property as I have 80k equity in my house 

ACG

It will drop your affordability, but I cant imagine it being enough to make it unaffordable. 

What I would say though is if any of the loan is part of the deposit, that could be a problem. Speak to your broker, let them go through it as it could be really simple and not a problem or it could be the other end of the scale (it sounds like it is the better end though). But I think this could be a case of too many cooks... Let your broker deal with it, thats their job.