Stamp duty, home improvements or immediately starting to pay down their new mortgage are all ways homebuyers would spend cashback from lenders, Leeds Building Society has discovered.
The society carried out national research among 1,224 people into mortgage cashbacks to find out whether borrowers valued this option and how they would spend this cash.
There were four top priorities:
25% would use cashback to cover the costs of removals or storage
24% would pay legal or other professional fees
24% would put the money straight into overpaying their new mortgage
23% would cover maintenance or improvements they were expecting in their new home, such as a boiler service.
There was a difference in behaviour between residential purchasers and buy-to-let landlords.
A third of borrowers buying a residential property (32%) were most likely to settle professional services’ bills with their cashback, whereas 51% of buy-to-let purchasers favoured putting the cashback straight into overpaying their loan.
Matt Bartle, Leeds Building Society’s director of products, said: “Everyone’s requirements will be individual to them, which is why we offer different combinations of fees, features and incentives across our mortgage product range.
“For that reason we offer incentive packages which give borrowers plenty of choice, not only on the rate and term of their mortgage, but also to help with the other costs of moving home or remortgaging.
“Building on our market knowledge and long experience of mortgage lending, we continue to test ideas and ask borrowers what they need, so we can develop the product deals and lending criteria which will help more people to have the home they want.
“Of course, borrowers can choose how to spend their cashback and it’s positive to see that people would use the funds to cover costs associated with moving and in some cases overpay to reduce the size of a loan immediately.”
Leeds Building Society has a variety of no fee cashback mortgages available, including:
3.49% two year fixed rate shared ownership mortgage up to 90% borrower share with £500 cashback
2.49% five year fixed rate buy-to-let mortgage up to 60% loan-to-value with £1,000 cashback
By Joanne Atkin
Source: Mortgage Finance Gazette