Halifax has launched a cashback offer, giving new customers a £1,000 bonus to sweeten their mortgage deal.
Buyers completing on qualifying mortgages before 2 July will pocket the eye-catching incentive, which will automatically be sent to their conveyancer on completion.
But how much attention should you pay to incentives when choosing a mortgage?
Here, we explore how to find the best mortgage for your particular needs.
- If you need some impartial advice on how to apply for a mortgage, you can contact our experts at Which? Mortgage Advisers on 0808 252 7987.
How to compare mortgages
Mortgage providers regularly introduce new incentives in order to attract new customers. Many mortgage offers will include initial discounts, waived fees or cashback offers.
Regardless of the incentives on the table, it’s important to compare the overall cost of the mortgage, both over the initial deal period and in the years after.
To demonstrate how incentives can factor into a mortgage deal, we have compared three fixed-rate mortgages available to a buyer with a £50,000 deposit looking to buy a £175,000 property.
|Lender||Initial Rate||Reverts to||Fees||Cashback||Total cost over 24 months||Total cost over length of mortgage|
Figures are based on a 25-year mortgage, with buyers paying the initial rate for 24 months and the revert rate for 276 months.
In this example, the largest cashback deal from Danske Bank may make it the cheapest of the three over the initial deal period, but it’s higher revert rate means you’ll end up paying far more over the length of a 25-year mortgage. By contrast, the First Direct deal offers no cash incentive, but ends up costing less over the life of the loan.
Look beyond cashback incentives
Which? Mortgage Advisers principal adviser David Blake said: ‘It’s great news for first time buyers and home movers that lenders are looking at ways they can help cover the costs of moving.
‘It can often be a very expensive process with unexpected costs. That said, it’s important that people are not swayed purely by an incentive such as cashback and instead, look at the product as a whole, taking into account the rate of interest and fees.
‘There are also additional considerations to make, such as the lenders follow-on rate and what their existing customer retention policy is like.’
Your home may be repossessed if you do not keep up repayments on your mortgage.
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