Halifax is now offering first-time buyers, home movers and those who remortgage from another lender £500 cashback on certain deals until 18 March 2018.
An extra five hundred quid in your pocket when you move home is nice to have – but in opting for the cashback deals are you doing yourself out of a better rate or lower fee mortgage that could be better value long term?
We crunch the numbers to find out.
If you’re looking for £500 cashback specifically, Accord Mortgages has a better rate
The cashback offer is for a limited time only but if you catch it before it’s withdrawn, you will receive £500 on the day your mortgage completes.
It’s available to first-time buyers, home movers and customers who remortgage from another lender. Landlords, existing Halifax mortgage holders looking to remortgage or borrow a bit more need not apply.
You’re only going to be eligible if you’re borrowing between £100,000 and £250,000 and the deal is also only available from the lender directly.
If you use a mortgage broker they won’t be able to access the offer for you, which means if you want it you’ll need to do your own research to make sure it’s the best deal for you.
Halifax’s rates are not the best in the market by rather a long stretch but it has competitive rates on its fee-free deals, which can be cheaper to take over the long term.
How do the mortgage deals compare?
The best rate on the market at the moment is 1.09 per cent for a two-year fix from Santander available up to 75 per cent loan-to-value. It comes with a whacking great fee of £1,499.
Monthly repayments on a £100,000 mortgage over 25 years on this deal would be £381, while the cost over two years factoring in the fee is £10,642.
Compare this to Halifax’s 75 per cent LTV two-year fixed rate of 2.14 per cent with no fee. Monthly repayments on this deal are £50 more expensive at £431 a month but the overall cost of the deal over two years is £305 less than the Santander fix at £10,337.
When you factor in the £500 cashback, this cost drops to £9,837.
If you’re looking for £500 cashback specifically, Accord Mortgages has a better rate with its 75 per cent LTV two-year fixed rate currently at 1.99 per cent, making monthly repayments £423 and the cost over two years £10,161 or £9,661 minus the cashback – almost £200 less than the Halifax deal.
If you have a 40 per cent deposit or equity to put in, you might choose Sainsbury’s Bank’s 1.19 per cent two-year fixed rate, which comes with a lower £745 fee.
This offers a balance between lower monthly repayments and lower overall cost. On the same mortgage as above monthly repayments are £386 and the overall cost including the fee over two years is £9,998.
There are several other lenders offering cashback deals, the best of which is currently from Post Office, which has a two-year fixed-rate mortgage at 2.68 per cent for those with a 10 per cent deposit.
This deal comes with no fee and offers a cool £1,000 cashback on completion.
Monthly repayments on the same loan are £458, while the cost over two years is £10,986 – or £9,986 if you count the cashback.
Bank of Ireland also has a 90 per cent LTV two-year fixed rate at 2.57 per cent, which comes with £750 cashback.
This is Money verdict
The Halifax deals are competitive but they’re not the cheapest on the market.
It really depends what you’re looking for and whether you will qualify for the deal. Every lender has a slightly different appetite for what sort of borrower they’re looking for.
Halifax is particularly good if you’re self-employed or have a slightly quirky income structure. Santander might prefer salaried employees in full-time jobs for example.
These cashback deals are not available through mortgage brokers so if you want to apply, you’ll be assigned a Halifax adviser who isn’t obligated to tell you about any better deals available from other lenders that could save you money.
Using a broker is usually worth it though – if you go to one to compare this Halifax deal with everything else on offer you’d more than likely be told about the Accord Mortgages rate.
This wouldn’t be visible on typical price comparison websites either as Accord is the broker-only arm of Yorkshire Building Society, meaning you can only get mortgages from it if you use an adviser.
Taking this instead of the Halifax loan would save you £176 over the next two years.
True cost mortgage calculator
This mortgage payment calculator will allow you to see the effect of sneaky arrangement fees on your repayments. Use the second part of the calculator to compare deals.