Borrowers urged to ‘look beyond the deal’ as Halifax offers £1,000 cashback with a mortgage
Halifax is offering £1,000 cashback to first-time buyers, home movers buy-to-let customers and mortgage ‘switchers’.
The £1,000 will be paid automatically on completion, and sent to the conveyancer with the completion funds.
Mortgage cashback offers have been in decline despite high levels of competition in the mortgage market due to record low rates.
The number of deals has plunged from 974 last June to 771 today, according to data firm Moneyfacts.
The average amount offered as cashback has also dipped from £479 to £436 today.
The Halifax deal will, therefore, be a boost to borrowers, especially struggling first-time buyers. However, experts say cashback offers come with a warning.
“Whilst the idea of free money may sound appealing, borrowers must consider these deals with caution as they are often accompanied by a slightly higher rate or fee”, said Charlotte Nelson, finance expert at Moneyfacts.co.uk.
“Mortgage applicants would be wise look at the product in its entirety to ensure that the best deal is obtained.”
Meanwhile, Andrew Hagger of Moneycomms.co.uk said these marketing initiatives could lose borrowers money.
“£1,000 is a big help for first time buyers who would have no problem in spending that (and more) on things for their new home, but they shouldn’t sign up for the deal without checking how the mortgage itself stacks up.
“Get an independent mortgage adviser to crunch the numbers – they will look at the interest rate and product fee and work out which product is the most suitable based on total cost.
“It’s a great marketing initiative but borrowers need to look beyond the headline grabbing pound signs or they could end up being out of pocket.”
The Halifax deal is available to customers who apply between 15 August and 25 September 2016.