Yorkshire Bank and Clydesdale Bank have both released a range of mortgages that are free of fees and offer cashback as an incentive.
The banks are attempting to attract borrowers with the new deals, which are available to those with smaller deposits. Until June 9 this year, both banks are offering the products with £1,000 cashback. Although the rates being offered by the lenders are not the cheapest deals, the £1,000 could make them a worthwhile consideration for many borrowers.
According to ThisIsMoney.co.uk, a number of lenders use cashback as a way to entice customers. However, although many borrowers will be tempted by the promise of cashback, the site warns that it may not always be the cheapest option in the long term. Both lenders are offering a two-year fixed rate, with deposits of either 10% or 15%, along with the cashback.
To calculate whether it is a good deal for you, work out what you will pay over two years on the cheapest available deal, and then calculate what you will pay on the deal from Clydesdale or Yorkshire Bank before deducting the £1,000. It may be preferable to seek help from a mortgage adviser, who has taken a CeMAP course and understands how payments are calculated.
The site also advises borrowers to be aware of customer service levels of a lender, and points out that the deal with a 10% deposit would be more expensive than the cheaper deal available, although the deals with a 15% deposit work out cheaper if you consider the £1,000 cashback.
