Due to the competition in the marketplace, lenders are going the extra mile to entice customers to their products. Some offer cash-back as an incentive and one high-street bank is now offering to pay the Stamp Duty Land Tax (SDLT), up to the value of £2,500. Are these good deals, or is there a catch?
This does not constitute advice and advice should be sought in all instances before acting on it. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
The “cash-back” incentive
Cash-back in any form is an incentive that understandably grabs your attention. After all, who doesn’t like a few extra pounds in their back-pocket, especially at times when money seems to just be going out.
However, cash-back promotions can be a clever way to deviate your focus from other smaller details, and you may end up paying for that in the future.
Would you like your Stamp Duty paid?
Paying Stamp Duty Land Tax (SDLT) can be a limiting factor when it comes to home ownership. It is hard enough to save for the deposit, but then also to have to cover the SDLT as well – it’s tough.
Barclays have therefore reached out to those home owners that are struggling to save enough in advance, with a solution; take our mortgage product and we will pay your Stamp Duty.
- Buyers that purchase a property worth £100,000 to £150,000 will receive £1,500 cash-back on completion of the mortgage.
- If you buy a property worth £150,001 to £500,000 then the cash-back increases to £2,500.
Needless to say these figures sound attractive and are generally higher than other cash-back offers.
The value of your property makes a difference
It’s covered!
The SDLT on a property worth £250,000 is £2,500, meaning that if you met criteria, you could get your entire SDLT paid through the cash-back incentive.
There is even some spare!
On properties worth £150,000 the SDLT is only £500, so given the £1,500 cash-back offer, not only will your SDLT be covered, but you will also have surplus to use for decorating, clearing debts or buying a nice crate of champers for your house warming party!
You’ll need to contribute!
If buying a property valued over £250,000, then you will still get £2,500 towards the SDLT but the rest you will have to contribute.
What? Ask the seller if you can pay more!
Where properties are valued at the £150,000 mark, there is even scope to ask the seller to increase the asking price marginally so that the higher cash-back value applies!
SDLT can also be paid up to 30 days after the property transaction, so it isn’t even necessary to find the money from elsewhere; you can simply use the cash-back direct to cover your SDLT.
The mortgage conditions:
- Available for first-time buyers, or home movers
- A 20 percent deposit is required
- The rate is 2.69 percent, fixed for 5 years
Rates are often higher than average
It is essential though to not only look at the benefit incentive, but also to assess the longer-term cost of the mortgage.
Most rates that are offered with a cash-back incentive have a higher rate than other products on the market, and want to fix you into their product for longer.
The lender tends to claw back their up-front “generosity” over the term of the loan.
Working with a mortgage broker can assess all options and weigh up the pros and cons of each deal available to you.
It may be that having a cash-back option is the factor that allows you to be able to purchase your dream home, or afford to go a little higher up the property ladder. Therefore, you may be more than happy to pay a higher rate of interest.
Just make sure you have unturned all stones in the decision-making process.
Review all your mortgage options
A professional mortgage broker can help you decide which mortgage product is best for you, based on assessing all options. Call Chris today:
Tel: 01403 780 770
Follow us on Twitter and LinkedIn for regular financial and mortgage updates
?