Homebuyers

Some Companies Are Offering Discounted Mortgages as an Employee Perk. Here’s What to Know

Between high home prices, a limited supply of homes for sale in some areas, and hefty monthly payments, the housing market can be difficult to break into as a first-time buyer.

As employers seek new perks to attract and retain workers—ranging from pet insurance to student loan repayment—some companies are now partnering with mortgage lenders to offer employees discounts on home loans.

While not commonplace yet, it’s part of a slowly growing trend. 

“We're constantly hearing from younger generations that they are having difficulty securing housing,” said Sara Green-Hamann, owner of Tallwood HR Consulting. “With interest rates regularly increasing, the burden of getting into a home also continues to increase.”

How do employer-sponsored mortgage discounts work?

Some larger companies are offering the mortgage discounts as a perk to coincide with the Return-to-Office (RTO) mandates post-pandemic.

The benefit is also more common in industries that require on-site workers, where proximity to the workplace is a key factor. As larger companies continue to implement these programs, Green-Hamann expects smaller organizations to follow suit.

“Partnering with a mortgage company provides employees with a reduction in rates and may open up opportunities to purchase a home that weren't previously there,” said Green-Hamann. “This is a way to help employees who may have moved away from the home office, return to the home office location.”  

Typically, these partnerships involve an employer establishing a relationship with one or more lenders and negotiating a discount that employees can access in exchange for the referral.

“Employees are introduced to the lender by the company and then work directly with the lender to secure a loan,” Green-Hamann said.

There are often eligibility requirements, such as full-time employment and a minimum tenure (i.e. six months) before an employee can qualify.

“Most employers require employees to meet specific criteria before accessing the benefit,” added Sarah Snipes, head of people at Remote People.

The benefits of mortgage discounts

The two biggest advantages for employees who access the mortgage discount are cost savings and accessibility to homeownership.

“Pre-negotiated reduced interest rates can save employees significant money over time and lower rates can reduce the barrier to entry for employees,” said Green-Hamann.

Mark Albrecht, a principal with MJA HR Consulting, said these kinds of benefits programs have been shown to boost employee morale, increase productivity, and improve retention.

Working with a lender that has a relationship with your organization can also streamline the process, providing employees with an easier, less stressful experience.

And employees may feel increased loyalty to the organization, resulting in higher productivity and higher morale leading to less turnover.

For employers, offering mortgage discounts can enhance talent attraction and retention.

“This benefit alone will not significantly impact employee retention and attraction, however, combined with other benefit offerings it will help marginally,” said Albrecht.

He stressed that employees today are looking at the culture, pay, and health care, paid time off and other major benefits first. 

Potential drawbacks of employer-sponsored mortgage benefits 

While mortgage benefits are generally advantageous for employees, there are certain limitations and potential drawbacks to consider.

“Ultimately, loan approval decisions rest with the mortgage lender,” Green-Hamann said.

If an employee is denied a loan, they may associate that disappointment with their employer’s partnership with the lender, especially if they were unfamiliar with the process.

And if employees encounter challenges during the loan process or receive unsatisfactory customer service, it could inadvertently reflect poorly on the employer’s reputation.  

On the employer side, the risks are more minimal.

“There are some costs to be aware of, including the time and effort to negotiate rates and maintain the program, as well as HR administrative costs such as verifying employment and communicating the plan,” said Green-Hamann.

However, this perk may more than pay off if employees take advantage of it.