HOME buyers on the lookout for some free cash are in luck because Nottingham Building Society is offering up to £1,000 in cashback for those taking out a mortgage.
The lender has launched three new mortgage deals, and they’re available for both first-time buyers and existing homeowners.
Smalley Marsey Rispin Architects Nottingham Building Society has launched three new mortgage deals
Several lenders offer free cash to home buyers in order to attract customers, and earlier this year Santander launched mortgage deals with a £1,000 cash bonus to first-time buyers.
At Nottingham Building Society, you’ll be able to pocket the £1,000 if you get its mortgage with a loan-to-value (LTV) of 90 per cent, which comes at a 2.66 per cent interest rate.
The loan-to-value is the ratio between the value of the loan and the value of the property, meaning if you had an LTV of 90 per cent, you’d need to cough up a 10 per cent deposit.
You can get a smaller £500 cashback at the building society if you instead go for the mortgage deal with an LTV of 95 per cent at a 3.18 per cent rate, or the one with an LTV of 85 per cent at a 2.25 per cent interest rate.
PA:Press Association Mortgages with cashback can be tempting but make sure you calculate the overall cost
All three deals are fixed at the rates until August 1 in 2021, and they come with no fees.
They’re not available online though, so you’ll need to pick up the phone or pop by one of its branches to be able to get it.Are they good deals?
First of all, it’s worth noting that you’ll only get the £1,000 or £500 after you’ve taken out the deal.
That means you won’t be able to use the cash towards your initial deposit if that’s what you were hoping for.
But Andrew Hagger from comparison service Moneycomms reckons that the mortgage that requires a 10 per cent deposit (LTV of 90 per cent) is “actually really competitive”.
On a 25-year mortgage, it’s a best buy for loans of £150,000 fixed over two years.
It narrowly beats a mortgage deal by Yorkshire Building Society by £31, as this comes with a £995 fee and £500 in cashback at a 1.84 per cent interest rate, he said.
How long should I fix my motgage for?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, or 84 months with a seven-year deal, 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 to seven years rather than every two years.
“The slight downside with a longer 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’l have to fork out for the fee.”
If you instead had borrowed £220,000 over 25 years but still had a 10 per cent deposit, you’d be better off by going for Yorkshire Building Society’s deal. In fact, it’d save you a whopping £617 over the two years, Mr Hagger added.
In other words, it’s important to do the maths and not just take out a mortgage deal because of the cash bonus.
Also keep in mind that lenders will only offer the lowest rates to those who have the best credit scores so you’re not guaranteed the advertised rates.
Mr Hagger told The Sun: “Cashback can look really attractive if you’re a first time buyer as you’ll have a list as long as your arm of things you could spend it on for your first home – but don’t sign up purely on the basis of the cash handout – it could prove costly in the longer term.
“Borrowers should always speak to an independent mortgage adviser who will look at the numbers and compare the true cost of a mortgage.
“So if you’re taking out a five-year fixed rate deal for example, it will include the total of your monthly repayments over the five year term, any lending or product fee and deduct any cashback from this figure.
“It’s fairly common to find deals without cashback that work out cheaper so consumers shouldn’t be blinkered by the offer of a £500 or £1000 cash freebie as they may be paying over the odds on the interest rate.”
What help is out there for first-time buyers?GETTING on the property ladder can feel like a daunting task but there are schemes out there to help first-time buyers have 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 – This is 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 their 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 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 on the Starter Homes website.
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