New research has revealed people taking out a residential mortgage can pick from a range of nearly 1,500 products which offer cashback – representing nearly a third of the market.
Meanwhile those looking for a cash incentive with their buy-to-let loan can take advantage of 44 deals.
According to Moneyfacts.co.uk, which carried out the analysis, lenders are turning to these incentives as a way to stand out from the crowd in a packed mortgage market where the number of deals available is at an all-time high.
Indeed, the idea of getting some cashback after the mortgage has been processed, could be very alluring to borrowers. However, experts generally advise you also consider the cost of any fees and interest rates when looking at cashback options – there might be another deal available with a lower rate or no fees which is better value.
First-time buyers
Darren Cook, finance expert at Moneyfacts.co.uk, said: “As always, borrowers will need to compare mortgages by taking all their features in to account, rather than focusing solely on the incentive package, rate or fees.”
However, he also said these deals might prove attractive to anyone who is new to the property market. He added: “First-time buyers may be encouraged to find that two-thirds of residential mortgage deals with a cashback incentive option require a deposit of up to 20%.
“This could make quite a difference upfront to those who have struggled to save a suitable deposit amount.”
Buy-to-let landlords
Cashback can also prove useful to landlords and is becoming a more prominent feature of buy-to-let mortgages, Moneyfacts said.
Indeed, following last year’s upheaval in the sector, it could benefit landlords looking for ways to cut costs and increase their margins.
Cook explained more than half of the cashback products were available to landlords borrowing high amounts of between 70% and 80% of their properties’ value, and this made them particularly appealing to first-time landlords.
He added: “Despite the increased number, the percentage of the BTL market that these deals encompass remains below 20%, which means interested landlords will need to do some digging to find the right product with the right incentive(s).”
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