Mortgage blog: The new perks lenders are trying to tempt you with

Posted 5 September 2013

With little to choose between the best mortgage deals, lenders are in a tough fight to maintain their share of the market. So, it's perhaps no surprise that banks and building societies are thinking out of the box and coming up with new and innovative ways to attract your custom.

Many lenders now offer unusual perks to mortgage customers including free internet and TV deals, vouchers and cashback. But, are these deals actually worthwhile? Or are you better choosing a lower rate and ignoring these incentives? We investigate.

Work out the total cost of a deal before taking vouchers or cashback

The Daily Mail reports that "lenders are finding different ways to compete for your business other than on rate". Halifax has recently launched a deal whereby it will give all customers who use its homemover mortgage range £500 towards a TV, phone and internet package.When you have completed on your Halifax mortgage you will be sent a claim form which you return along with a copy of the bill from your chosen media provider. Halifax will then credit your TV, phone or internet provider with £500.

"This Halifax scheme is just one of a number of innovative ways that lenders are targeting mortgage business," says Keith Osborne, editor of "For example, the Dudley Building Society is offering Argos vouchers to existing customers who introduce a friend while the Coventry is offering Ikea vouchers. While these perks may sound appealing, it's vital that you compare the value of these benefits with the overall cost of rival products. You could well be able to save more than the value of a few vouchers when you take a lower rate deal with another lender."

For example, the Daily Mail reports that for a 15% deposit, Halifax has a two-year fixed rate at 3.79% and a fee of £995. In comparison, the Post Office has a two-year fixed rate at 3.49% with no arrangement fee. Based on a £150,000 loan over 25 years, you would actually save more than £1,000 over the term of the deal if you went with the Post Office product - a saving which outweighs Halifax's contribution of £500 towards your phone or internet bill.

"Many lenders also offer cashback deals on their products. Here, you receive a cash lump sum once your mortgage has completed that you can use for any purpose," adds Osborne. "However cashback deals often mean that you will pay a higher mortgage rate - and this could leave you in a worse overall financial position than ignoring the cashback and taking out a better deal."

Mr Osborne's advice is to speak to a mortgage broker before deciding on a deal. "A broker can work out the overall cost of all the deals - including cashback products - to find the one that saves you the most money," he adds.

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