Several banks offer “cashback” to home buyers, but Barclays new mortgage goes further still.
Barclays have just announced that they will pay buyers stamp duty on properties worth up to £250,000.
Seven out of 10 buyers are affected by stamp duty, which is paid on homes worth over £125,000. The cost of stamp duty on the average priced house is currently £1603.
Craig Calder, director of Barclays Mortgages, said: “This fee-free cashback purchase-only mortgage completely removes one of the major barriers faced by many first-time buyers and homemovers, as well as there being no product or valuation fees to pay.
“With a cashback of up to £2,500, it will help first time buyers move forward and buy their own home much sooner – with the flexibility to spend the cashback to either recover their Stamp Duty cost or however they wish.”
The rate available on the new product is at 2.69% for a five-year fix at 80% loan-to-value (LTV). (Mortgage solutions UK)
Other banks pay cash back on mortgages but none currently pay more than £1000.
As good as it sounds?
It seems that this mortgage is best for those who have no way of paying the stamp duty up front. This is because the lending rate is higher than the best-buy mortgages foe buyers able to put down a 20% deposit.
So if the borrower requires a smaller loan, the deal is likely to be better because the stamp duty will be (more than) covered and the higher rate is paid on a smaller loan.
Therefore this deal is best for those buying a property just over £150,000 as they will get more cash back than those paying slightly less. For those buying a more expensive property, it would make better sense to look elsewhere so as not to pay a higher interest rate just to get a relatively small amount of cashback.