Large rise in number of cashback mortgages
When you buy a property, there are many costs to consider after you’ve signed on the dotted line and picked up the keys.
Cashback mortgages offer a lump sum on completion of the mortgage process when your homeloan begins – and they are increasing in number.
The number of cashback deals has increased by 27% over the past year alone, according to Moneyfacts.
The financial information provider noted that 1,203 cashback mortgages are currently available compared to 948 a year ago.
How much cash do you get?
The average level of cashback has risen in the last year to £409 today, but the highest cashback product currently on the market offers an eye-watering £1,000 lump sum paid to you when the mortgage starts.
Charlotte Nelson, finance expert at moneyfacts.co.uk, said: “Following the recent Base Rate rise, many borrowers are starting to look at the cost of their mortgage more closely, so it’s great news that there’s been an increase in the number of deals on the market that offer a cash rebate.
“Even better, borrowers are likely to see more cash than they did a year ago, with the average cashback amount having increased by £41 to stand at £409 today, allowing borrowers to get a little something for nothing.
“Rates have started to go up in the past few months, so cashback incentives have stepped into the void somewhat, offering a simple way for providers to keep drawing in customers.”
Fewer deals for FTBs
Cashback is usually considered an incentive for those with higher loan-to-values, often first-time buyers, but Moneyfacts found that since the Base Rate rise earlier this month, the number of deals with cashback available to them has shrunk by 30%, from 460 products available to those with a 5% or 10% deposit on 1 November to 321 today.
Instead lenders are increasingly using cashback as an alternative to free legal fee offers in response to concerns from mortgage advisers over the impact they have on service levels of conveyancers.
Sister title Mortgage Solutions reported that some lenders have now removed free legal fee offers, replacing them with equivalent levels of cashback.