When the main concern with mortgages is whether you can afford the monthly payment, not to mention having a decent deposit, it’s obvious that cashback mortgages are going to generate a lot of interest.
There are several good deals for cashback mortgages around now, including a time-limited one from Lloyds Bank. Home owners who are looking to re-mortgage can switch to Lloyds before 2nd January next year and get £500 back by doing so. The deal applies to a two-year fixed rate deal of 2.84%, and customers must have a maximum 75% loan-to-value.
The bank has two other deals on offer that have the same cashback provided. Another two-year fixed rate is included, this time at 2.99% with a maximum of 80% loan-to-value (LTV). The third option is a 2.94% five-year fixed rate deal, but this requires an LTV of up to 60%.
Another lender also provides cashback opportunities
Lloyds is not alone in offering cashback to certain customers. Accord Mortgages announced cashback incentives towards the end of October. Accord only acts as an intermediary, and offers £250 in cashback for customers looking to re-mortgage with them.
The cashback applies to two products – one fixed for two years and the other fixed for five. The longer-term deal is set at 2.13% with a 75% LTV, while the deal lasting for two years is set at 1.38% with the same LTV in place.
TSB is setting out to help first-time buyers
First-time buyers will be particularly interested in any promise of cashback. This could be why TSB has introduced a new range of mortgages aimed at first-time buyers. These offer £750 cashback and span periods from two years to 10 years.
The announcement was made early November, and follows on the heels of their announcement that all fees associated with mortgage applications would be ditched. The mortgage distribution director for TSB, Roland McCormack, stated the company had experienced a “record summer of applications”. No doubt this will continue with the cashback offer and zero product fees as well.
Do your sums first
While cashback offers a nice opportunity to those looking for a good deal, it may not be the best deal in every case. Would-be customers should look at the interest rate attached to the product. In some cases, it can be cheaper to pay less interest with a deal that doesn’t offer cashback than to opt for one that does. You should balance the long-term picture alongside the short-term one to get the best understanding of the situation. While cashback is nice to have, it may not represent the best deal for someone looking to pay as little as possible in interest each month on their mortgage.
Some have questioned whether the offer is a good idea, or whether it may tempt some into borrowing when they are not in a healthy position to do so. However, with stricter rules in place now than was the case a few years ago, this would surely not be a major concern.