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Steady Rise in UK Mortgage Freebies

Housing-Market / Mortgages Nov 03, 2015 - 12:42 PM GMT

By: MoneyFacts

Housing-Market

Falls in mortgage rates over the past couple of years have left providers with little room to manoeuvre when it comes to competing on price. As a result, providers have come up with more innovative ways to attract customers.

One of the most popular methods appears to be adding an incentive package to a mortgage deal. Data from Moneyfacts.co.uk shows that the number of mortgage products offering a range of freebies has increased by over third in five years, illustrated by the table below.


Charlotte Nelson, Finance Expert at Moneyfacts.co.uk, said:        

“The incentive package has become one of the most popular weapons in a provider’s arsenal when it comes to attracting borrowers, with the number of deals offering some form of incentive increasing by 616 in just two years.

“Now that rates have reached record lows, providers are looking for new ways to compete and attract borrowers. The incentive package fulfils this goal by offering new customers an enticing range of delights, such as free legal fees, gift cards and even cash rebates.

“Incentive packages in particularly cash rebates are especially appealing to first-time buyers as they potentially lessen the burden on their savings, giving them more cash for the all-important deposit. However, any savvy borrower can work the incentive package to their advantage and minimise upfront costs by choosing the best deal they can.

“Several providers now offer multiple options within one range of products, which means borrowers can tailor their mortgage choice to their benefit. However, more choice can mean it’s more difficult to compare options and gauge the potential benefits of an incentive package, particularly if it includes free valuation and free legal fees, which vary greatly according to the property price and may not negate the cost of a higher rate or fee.

“Freebies are always appealing but borrowers shouldn’t choose a mortgage based on its incentive package alone. Instead, mortgage applicants would be wise to look at the product in its entirety to ensure that the best deal is obtained.”

www.moneyfacts.co.uk - The Money Search Engine

Moneyfacts.co.uk is the UK's leading independent provider of personal finance information. For the last 20 years, Moneyfacts' information has been the key driver behind many personal finance decisions, from the Treasury to the high street.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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