Mortgage incentives may not be cheapest option

May 15, 2017 by Brendan

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A new mortgage product has recently been launched by the Halifax, offering £1,000 cashback. Any buyers who complete the qualifying mortgages before 2nd July will qualify for the incentive, which will be sent to the conveyancer on the date of completion.

However, although this may be a good deal for some buyers, how important are incentives when you are searching for a mortgage? Lenders often introduce incentives to attract new customers, often including waived fees, cashback offers or discounts. Before accepting one of these offers, it is crucial for buyers to consider the deal long term, and the overall cost. For some deals, it may be cheaper during the initial period, but cost more in the long term. The overall cost of a mortgage without an incentive may be cheaper over the long term.

According to David Blake, principal adviser at Which? Mortgage Advisers, it is great news for buyers that lenders are providing ways to reduce the cost of moving.

The incentive may help with the cost of moving home, which is often a costly process. However, Blake advises buyers to consider fees and interest when calculating the overall cost of the mortgage, before applying for a mortgage deal with an incentive.

Calculating the cost of a mortgage can be complex, as there may be varying interest rates and fees to be factored into the calculation. Mortgage advisers spend time studying on a CeMAP training course, so that they can help buyers to work out the best deal for them.