Number of mortgages offering cashback to homeowners surges

CASH-STRAPPED mortgage borrowers have a growing choice of deals which come with cashback as more providers try and entice customers.

Research from Moneyfacts found that the number of deals with cashback soared to 1,315 in May compared with 923 last year.

The average cashback sum also jumped to £449 compared with £366 a year ago.

Providers including Barclays, Sainsbury's Bank and Yorkshire Building Society have all launched or improved deals that include a cashback incentive over the past couple of years.

On average, borrowers can get £83 more in cashback today than they could a year ago and competition for this perk has intensified in recent weeks, according to Rachel Springall, a finance expert at Moneyfacts.

She said: "At a time when the mortgage market has undergone a period of uncertainty and with rates having subsequently risen, lenders have been eyeing up their incentive packages, not just their interest rates."

What help is out there for first-time buyers?

GETTING on the property ladder can feel like a grim task but there are schemes out there to help first-time buyers own their own home.

Help to Buy ISA – It's a tax-free savings account where for every £200 you save, the government will add an extra £50. But there's a maximum limit of £3,000 which is paid to your solicitor when you move.

Help to Buy equity loan – The government will lend you up to 20 per cent of the home's value – or 40 per cent in London – after you've put down a five per cent deposit. The loan is on top of a normal mortgage but it can only be used to buy a new build property.

Lifetime ISA – Another government scheme that gives anyone aged 18 to 39 the chance to save tax-free and get a bonus of up to £32,000 towards your first home. You can save up to £4,000 a year and the government will add 25 per cent on top.

Shared ownership – Co-owning with a housing association means you can buy a part of the property and pay rent on the remaining amount. You can buy anything from 25 to 75 per cent of the property but you're restricted to specific ones.

"First dibs" in London – London Mayor Sadiq Khan is working on a scheme that will restrict sales of all new-build homes in the capital up to £350,000 to UK buyers for three months before any overseas marketing can take place.

Starter Home Initiative – A government scheme that will see 200,000 new-build homes in England to be sold to first-time buyers with a 20 per cent discount by 2020. To receive updates on the progress of these homes you can register your interest here.

Many of the cashback offers are aimed at first-time borrowers – with very little cash to spare up-front – wanting to get their foot on the property ladder,

It comes at a time when some mortgage rates have been creeping up amid speculation over further possible increases in the Bank of England base rate.

Ms Springall said the surge in mortgages offering cashback will be "great news for borrowers looking to cover the cost of moving, or to pay for the fees of instructing their own solicitor to handle the legalities".

Still, out of the entire mortgage market, only 28 per cent of the deals offer a cashback incentive, so there is much more room for improvement, according to Moneyfacts.

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Ms Springall added that while cashback is a "handy perk", borrowers should weigh up the overall mortgage deal rather than just focusing on a particular rate or incentive.

Earlier this month, Yorkshire Building Society launched a mortgage for first-time buyers with £1,000 cashback.

Borrowers will receive the cash on four new mortgages and the building society is also waiving fees which usually cost up to £995.

The Post Office is also offering a zero per cent deposit mortgage deal for those looking to buy a property for the first time – but you'll need to put your parents house down as a safety net.

What’s the difference between a two-year or a five-year deal?

WHEN it comes to mortgages, there’s a lot to take in.

Andrew Hagger from MoneyComms weighs up the pros and cons of a fixed-term mortgage to help you decide what one will work for you.

"With a five year fix you have the peace of mind that your interest rate and monthly repayments won't change for 60 months, even if the Bank of England puts rates up.

"This is a great help with budgeting.

"Also most fixed rate mortgages charge a product fee – typically £500 to £1,000 – so it's better to only have to pay this once every five years rather than every two years.

"The slight downside with a five year deal is that you are liable to pay an early repayment charge if you exit the loan early – and rates come down.

"It's not applicable if you move home, but say for example, if you split following a relationship break up and had to sell before the end of the term, then you'll have to fork out for the fee."

According to the latest English Housing Survey, the average age of a first time buyer now stands at 33 – and they need an eye-watering average deposit of £50,000.

But despite the problems of getting on the property ladder Brits still dream of buying their own home, with 60 per cent of renters still intending to buy a house.

One young couple lived on a diet of beans and noodles while they saved to buy their first home for £220,000 all before they turned 21.

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