Choosing the Best UK Mortgage Incentive

The UK mortgage market is fiercely competitive and many mortgage lenders try to attract new borrowers by offering various discounts and other incentives.

Most of these take one of four forms:

Mortgage Discounts

You may receive a discount of; say 2%, on the standard rate for the first year. This is useful when you have the expense of furnishing your new property.

Cash-backs

On completion you receive an agreed sum back in cash. Again this is useful when you have the expense of furnishing your new property.

Free Insurances

For example, the lender may say that it will pay the premiums for buildings insurance for the first five years.

Waiver of Fees

The lender agrees to waive the cost of the survey fee and/or the arrangement fee

Some lenders offer a package of incentives that includes a combination of all of the above,

Trying to calculate whether a 2% discount for the first year is worth more than no survey fee and free insurance for five years is extremely difficult. In fact even the mortgage broker will probably use a computer programme in order to determine which package offers the best value.