Rate saver’s dilemma: Navigating home loans with workplace perks

In this instalment of the Work and Wealth Watch series by MaltaCEOs.mt and Money Coach Luca Caruana, Luca shares his expert advice to all your questions related to money, work and wealth. Want to see your own questions answered on MaltaCEOs.mt? Send your questions on [email protected]

Dear Luca,

As a full-time architect who’s just embarked on my professional journey, I am currently in the process of buying my first home alongside my soon-to-be husband.

Our workplace has recently reached advantageous arrangement with a leading bank, presenting us with exceptionally favourable loan rates—a prospect that fills me with both anticipation and apprehension.

This unique opportunity could potentially elevate our living situation from a three-bedroom apartment to a penthouse, aligning perfectly with our long-cherished dream, yet it’s not without its strings.

The catch lies in the condition that these benefits dissolve should I decide to part ways with my current employer, compelling us to shoulder the full loan amount. This clause makes me a bit apprehensive especially when considering my current financial stance, which would render the penthouse an unattainable dream without this loan reduction.

In light of these circumstances, I’m compelled to seek your guidance. Is embracing this enticing opportunity an undue risk, particularly given my financial limitations without this loan concession?

Thank you for your time and insight. I await your valued feedback.

Rate Saver

Luca Responds:

Dear Rate Saver,

It’s wonderful to hear about the opportunity you’ve been presented with to save on your home loan. The prospect of such savings is indeed exciting, especially in the context of achieving your dream home. However, your concern about the affordability of the loan without this specific benefit is understandable and warrants a cautious approach.

In contemplating your next steps, it would be wise to consider several factors critically:

1. Longevity with Your Employer: Reflect deeply on your current job satisfaction, career prospects, and how long you realistically see yourself working with this employer. This benefit ties you more closely to your current job, so your future plans with the company become particularly relevant.
2. Salary Growth: Investigate the company’s policy on salary increases. Understanding when and how your salary might grow is crucial, as it impacts your ability to comfortably afford the loan payments in the future.
3. The Nature of Employee Retention Schemes: While it’s encouraging that companies offer schemes to retain talent, such benefits can sometimes come with strings attached. Although it’s rare for such benefits to be revoked, it’s an eventuality that cannot be ignored.

Your decision should not only account for the immediate financial advantage but also consider the potential long-term implications on your financial health and career trajectory. Engaging in a thoughtful analysis of these aspects will guide you to a decision that aligns with both your financial and personal goals.

Best regards,

Luca,

The Money Coach, from the Money Coaching Hub