Cashback vs cheap mortgage rate: which is best? – Which? News - Which?

Cashback vs cheap mortgage rate: which is best? – Which? News – Which?

Mortgage lenders are dangling the prospect of up to £1,500 cash back before the noses of cash-strapped first-time borrowers. In February 2019, there were 2,924 mortgage deals available to first-time UK home buyers, with 827 of those (28 percent) offering cash back incentives of some sort. This is a notable increase from February 2018, when only 656 out of a total of 2,818 available deals (23 percent) offered cash back. Generally speaking, cashback incentives are nice but not big enough to be the main basis for a decision.

Key Takeaways:

Would-be homebuyers in the UK have a wide array of fixed mortgage options currently, with about a quarter of the options also sweetening the pot with cash back deals.
The low end of the cash back spectrum starts at about 250 pounds, but gets quite large, topping off at about 1500 pounds.
Although rates will vary from deal to deal, two of the heaviest hitters in the cash back lineup seem to be the Bank of Ireland and the Yorkshire Building Society.

“We’ve based our calculations on buying a £220,000 property with a 30-year mortgage term, and have compared the cost of the deal over an initial period of 24 months, as we assume a savvy borrower would look to remortgage at the end of their fixed-term.”