It's not unusual to expect a few discounts when you work at a job and get the goods and services you sell, whether it's a small discount at a shop you work in or something similar. You certainly wouldn't be alone in assuming that as a bank employee you may have an advantage when it comes to getting preferred loan rates.
Staff discounts are often the norm, and offered by some banks and lenders as well, whether it’s through lower interest rates or waiving off Lender's Mortgage Insurance (LMI). LMI protects the lender in case the borrower defaults on the loan and the property needs to be sold, and the recovery amount is lesser than the loan value.
Some banks may offer better deals to their employees, but that's not always the case. The consensus is that, as a bank employee, you could get better rates by looking beyond any staff benefit scheme, whether in your own company or at another bank.
Do bank employees get better mortgage rates?
Not all banks give discounts to their staff, and if they do, more often than not, the discounts may be on par with what they offer to the general public. Is there a reason why banks don’t give their staff attractive discounts? Usually, there are two considerations preventing banks from offering such discounts:
- Fringe Benefits Tax (FBT): Any discount passed on to a staff member could come under FBT rules, and the bank may end up getting taxed on the discount.
- Competition rules: Simply put, any discount given to the staff might have to be offered to the wider market in order to comply with various regulations.
Will a bank employee get any mortgage discount advantage?
If you are a bank employee and are in the market for a home loan, there are a couple of ways you can get a preferred mortgage discount:
If you are borrowing an amount that is over 80 per cent of the value of the property, your bank could waive your Lender's Mortgage Insurance fees. This is a one-time fee that the bank charges in case a borrower defaults on the payment. In this scenario, it could be advantageous to apply through the bank where you work.
If your loan amount is less than 80 per cent of the property value then you could get interest rates discounts. Here you may be better off applying for a loan from another bank or a lender.
The bank employee rate discount will depend on the lender, and it can range anywhere between 0.5 per cent and 1 per cent off the Standard Variable Rate. Moreover, you may be eligible only if you are a full-time employee, and have worked at the bank in your current role for at least 12 months.
A mortgage broker can often get you a better deal on a home loan
Not all banks have the same rates, and if your bank doesn’t offer competitive rates or isn't flexible with its rate choices, the chances of you getting a better deal are slim. Also, your bank may not tell you about better rates available at another lender. Even if you were to get a great deal with your own bank, those discounts would likely be removed if you switch jobs.
Approaching a mortgage broker may be more beneficial since they have data on more potential lenders with current rates. Mortgage brokers tend to offer a wider range of products for you to choose from, not only catering to a greater chance of landing a good deal, while ensuring the broker can find the mortgage that fits your requirements the best.
Additionally, a broker's knowledge of lending policies can help you get a better home loan at the most competitive rate. Sometimes a broker may be able to obtain a lower than advertised rate simply on the basis of their relationship with the lender.
When should you choose to apply with another lender?
There are a few reasons bank employees might choose to apply with another lender for their home loan needs. Some of these reasons include:
- Lack of privacy: While all banks have strict rules regarding privacy, they might not always be followed. Many people would be uncomfortable with the idea of their colleagues and other staff getting access to their personal details in the bank system.
- Leaving the job: It's entirely possible that staff discounts could be cancelled if an employee changes jobs. Rather than lose any advantages, it may well be easier to service your mortgage away from your dayjob, applying with other banks or lenders.
- Lending policy: Not every bank or lender will make an exception to their lending policy for employees. In fact for many applicants, the home loan application process is easier and potentially better if they apply with a lender who can cater to their exact needs.
What should you do next about getting a home loan?
If you work at a bank or lender, and you're in need of a home loan, your logical step might be to approach your company for a loan. However, it might be advisable to check out what's available in the world, or even find a broker who can help you get a preferred loan rate.