Will new cashback mortgage help people buy a property?

A new cash back mortgage has been launched by Barclays Mortgages in an effort to assist more people onto the property ladder.  The Barclays Homebuyer Cashback Mortgage will give buyers either £1,250 or £2,500 to put towards the stamp duty costs on their new property.  John Blake, Residential Conveyancer, here reviews the mortgage and explains who could benefit most from it.

What is the cashback mortgage?

The amount of cashback that is available to buyers under the Barclays Cashback Mortgage will be staggered depending on the price of the property; for homes between £100,000 and £150,000 buyers will receive £1,250, and for homes between £150,000 and £500,000, it is offering £2,500 in cash back. 

There are certain requirements in terms of the mortgage deal; the buyer must have a deposit of at least 20% to access the five-year fixed-rate deals, which have a rate of 2.69%; they are not available for buy-to-let or Help to Buy properties, but they can be used for shared ownership and shared equity schemes.  The deal also includes free valuations and there is no application fee. 

“The fact that a buyer must have a 20% deposit could be a struggle for some, particularly first time buyers, as it is normally this market that we see with a smaller deposit of around 5-10%,” explains John.  “The recent Halifax First Time Buyer Review showed that the average age of someone purchasing their first home is between 27 and 34, whose average annual salary is between £23,192 and £29,770, according to Office of National Statistics.  This means that a 20% deposit on a house is likely to be a large portion of their salary to be saved each month.”

Mortgage options for homebuyers

John concludes, “There are cheaper rates out there than 2.69%, but these normally require a larger deposit of around 40-50%.  Of course, this cashback mortgage won’t be right for everyone; people will have to weigh up whether it would be better financially for them to take a cheaper five year fixed rate or have the cash back.  There are many different varieties of mortgage deals in the market and it’s important that people find the right one for them depending on their circumstances in terms of monthly income and outgoings, how much deposit they have saved etc.   However, this is a positive move to see that more mortgage lenders are adding flexibility and incentives to encourage and support more people onto the property ladder.”

If you are looking to buy a property and you have questions about the process or you would like a quote, you can contact John or the Residential Conveyancing team by emailing conveyancingquote@warnergoodman.co.uk or visit their section of the website for the office numbers.

ENDS

This is for information purposes only and is no substitute for, and should not be interpreted as, legal advice.  All content was correct at the time of publishing and we cannot be held responsible for any changes that may invalidate this article.