The Government will have to respond to a petition proposing an alternate approach towards mortgage repayments after reaching more than 20,000 signatures so far.
The petition calls for people to be able pay towards their mortgage costs through a salary sacrifice, thus allowing borrowers to be mortgage free sooner.
Should the plan come to fruition, it would allow all mortgage contributions towards an individual’s main residence or family home to be made through salary sacrifice, prior to tax and national insurance deductions (similar to pension contributions).
With a deadline at the end of August, the petition has over 20,000 signatures at the time of writing and is currently awaiting a Government response. Should the survey hit 100,000 signatures the proposal will have to be debated in Parliament.
Nicholas Mendes, mortgage technical manager at John Charcol, said: “Many households feel that their income is being stretched beyond imagination, food inflation, higher energy costs, wages not keeping in line with inflation along with higher mortgage rates.
“It’s no surprise to hear people are feeling poorer and having less disposable income compared to two years ago.
“Compounding by tax changes, that will impact 7.8 million people who are projected to be paying income tax at 40% or above by 2027-28, resulting in 2.1 million more higher rate taxpayers and 350,000 additional-rate taxpayers in five years’ time, according to the Office for Budget Responsibility (OBR).”
He added: “The recent petition to allow people to pay their mortgage through salary sacrifice will be a shining light and welcomed.
“When we consider current deductible salary sacrifice schemes such as medical benefits, cycle to work scheme, pension contributions and car finance can all be used, considering most homeowners highest outgoing would be a maker step forward, reducing the tax burden many are likely to fall into in the future.
“It will be important to take into consideration the potential impacts when your taxable pay goes down which impacts your nation insurance contributions effecting entitlements like sick pay.”
Austyn Johnson, founder of Mortgages For Actors, said: “I have to be honest, I have no idea if this is good or not!
“I can see different sides to it. For example, how does this work for couples?
“Does it all come out of the one persons wage slip? If so, and they break up when does the mortgage stop coming out of the lower paid person? If the higher paid one disappeared, the mortgage being taken from the other would possibly leave them with no extra each month for anything.
“People paid variably, such as zero hour, may not get paid one month. Does that mean they then owe their work?”
He continued: “I can imagine a lot of issues when a job change happens too and the period in between then.
“However, on the flip side, it does mean no missed payments and ease of making that payment. I think I’m about 70-30 against.”
You can find the petition here.
