More mortgage deals offering free cash
There are currently 1,315 cashback deals on the market, up from 939 in May 2017, according to Moneyfacts research.
Borrowers can earn, on average, £83 more in cashback today than they could 12 months ago, with the average jumping from £366 to £449. But the highest sum available has fallen to £1,500 from £2,500.
Improved incentive packages will offer some relief to borrowers who have been met with rising mortgage rates in recent months.
In the last fortnight, Barclays, Coventry Building Society, Leek United Building Society, Loughborough Building Society, Sainsbury’s Bank, West Brom Building Society, and Yorkshire Building Society have all launched or improved their cashback deals.
Rachel Springall, finance expert at Moneyfacts, said: “This will be great news for borrowers looking to cover the cost of moving, or to pay for the fees of instructing their own solicitor to handle legalities. Still, out of the entire mortgage market, only 28% of the deals offer a cashback incentive, so there is much more room for improvement.”
The study suggests most ‘cashback on mortgage’ deals are aimed at borrowers with smaller deposits or equity. Some 64% of all deals on the market are available to borrowers with a deposit of between 5% and 20%.
What we think…
While cashback is nice to have, if you’re looking for a new mortgage deal, you should look for the most suitable package for you and your circumstances; don’t just focus on the incentive or headline-grabbing lowest rate.
Take this example from Moneyfacts. At 95% loan-to-value, Furness Building Society offers a £1,500 cashback incentive on its 4.50% five-year deal with no product fee, but it can more expensive than other deals in terms of true cost. As an alternative, Yorkshire Bank offers a 3.79% five-year fee-free fixed deal with up to £500 cashback and free valuation, making it around £4,740 cheaper over the first five years (based on a £200,000 mortgage).