Value of cashback
Is there high demand for cashback mortgages?
This reward is primarily popular in the UK, what is the benefit for lenders in offering this over other options?
Do cashback deals really sell? Do they make a difference?
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The importance of Cashback depends on the size of the mortgage, a £500 cashback is going to make little difference to the overall cost of a £400k mortgage, however, at the cheaper end of the market, an £80k mortgage with a cashback of £500 is likely to source top at the overall costing mortgage search. Due to most cashback being paid on or after completion, it should have little bearing on a clients decision. I have never once had a client who has chose a mortgage with cashback if it wasnt the cheapest mortgage on the market
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The small amount of cashback is instead of the free legal service most lenders offer on a Remortgage. It is popular especially within the broker community, as there is greater control and influence where the broker is integral to that legal work, in terms of feedback, support and chasing where necessary. Most free legal options can be tough for the broker to get involved with, and are inherent of frustration and delays, with brokers unable to influence proceedings. I would always take the cashback option, using a couple of well-trusted conveyancing firms who deliver on time, and give the broker plenty of feedback and tracking options.
No one wants delays on their remortgage, especially with very high SVR rates making it crippling for many borrowers. Trusted firms that deliver are so important, and lacking from most free legal arrangements, unfortunately.
No one wants delays on their remortgage, especially with very high SVR rates making it crippling for many borrowers. Trusted firms that deliver are so important, and lacking from most free legal arrangements, unfortunately.
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Cashback is vitally important because it gives clients and banks the chance to choose quality lawyers for conveyancing.
The fee-free legal services are overwhelmed this summer as we see the largest product roll-offs in history given the two-year anniversary of the SDLT window.
Cashback allows clients to choose a law firm outside of the big factories to help provide them with a swifter and more personal service.
If more lenders offered cashback at a higher value, we would see a huge reduction in the time it takes to get from mortgage offer to completion.
The fee-free legal services are overwhelmed this summer as we see the largest product roll-offs in history given the two-year anniversary of the SDLT window.
Cashback allows clients to choose a law firm outside of the big factories to help provide them with a swifter and more personal service.
If more lenders offered cashback at a higher value, we would see a huge reduction in the time it takes to get from mortgage offer to completion.
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On remortgage products, mortgage lenders will offer either a cashback product or a product with free legal fees. Solicitor costs means the free legal option is cheaper as cashback is usually between £200-£500 and solicitors costs are higher than this on average.
Free solicitors do have there issues, service levels and how long it takes can be problematic. If the client hasn't got long till they go onto their SVR I would be more likely to recommend the cashback option.
Free solicitors do have there issues, service levels and how long it takes can be problematic. If the client hasn't got long till they go onto their SVR I would be more likely to recommend the cashback option.
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Cashback is a clever way for lenders to manipulate themselves to the top of sourcing. This reduces the true cost over the initial period to make themselves that little bit more competitive than the next option. This is one half of the trick - the other being quoted legal fees as low as they can get away with on an illustration. It's amazing how many lenders stick '£150' in as a standard legal cost when in reality it could be a couple of thousand...
From a client perspective, cashback is nice. It's either a little boost as a buyer to replenish some of the costs, or if offered as a remortgage deal instead of free legals then it gives flexibility on firm to be used (so you can be more confident in service received) and can cover much of the bill. £500 upwards is the most meaningful amount in this situation though as £150-£250 nominal figures don't really begin to touch the sides.
I've never once had a client insist cash back be a feature of a mortgage though - so it's simply a nicety!
From a client perspective, cashback is nice. It's either a little boost as a buyer to replenish some of the costs, or if offered as a remortgage deal instead of free legals then it gives flexibility on firm to be used (so you can be more confident in service received) and can cover much of the bill. £500 upwards is the most meaningful amount in this situation though as £150-£250 nominal figures don't really begin to touch the sides.
I've never once had a client insist cash back be a feature of a mortgage though - so it's simply a nicety!
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It is very rare for a client to state any form of cashback is a pre-requisite for their mortgage. However, lots of lenders do offer small cashback amounts on their deals, anything from £150 to sometime £1000, but typically £250 or £500. When assessing the best overall deal for a client these small incentives; cashback, free valuations and legal costs being paid, combined with the rate and set-up fees can make all the difference as to which deal is the most suitable for a client. In the majority of cases, for average-sized mortgages, it is not the lowest interest rate deal that is best for the client, as the incentives available on a higher rate deal actually end up making it the overall lower cost option over the initial rate period.
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If you can get away with a cashback product, amazing. It means better service times and let's be honest, the actual service provided from conveyancers who are not on huge panels and flooded with work. I'm sure its great that you can get a free legal product, but its slow and usually not actually free anyway. CB for the win
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Is it a carrot or a stick? We find that cashback isn't always a main motivator for people. Really, it's rates and fees they're interested in, along with other eligibility criteria. These are the things that tend to have a bigger impact on monthly payments over the long term. However, if there's a cashback mortgage offer with a competitive interest rate and fees, it can be a good way to get extra money for moving costs or other expenses.
In terms of choosing between cashback and free legals, most people prefer cashback. They've then got the freedom to choose the solicitor they want to work with. Free legals, on the other hand, often come with restrictions on which solicitors you can use.
Ultimately, the best way to decide whether a cashback mortgage is right for a customer is to help them compare different deals and factor in all of the costs involved. Looking into any deals means looking at the amount of cashback too -- it varies depending on the lender and the mortgage product.
In terms of choosing between cashback and free legals, most people prefer cashback. They've then got the freedom to choose the solicitor they want to work with. Free legals, on the other hand, often come with restrictions on which solicitors you can use.
Ultimately, the best way to decide whether a cashback mortgage is right for a customer is to help them compare different deals and factor in all of the costs involved. Looking into any deals means looking at the amount of cashback too -- it varies depending on the lender and the mortgage product.
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Absolutely they do when the alternative to cashback is often 'free legals' on a remortgage. With free-legals are generally the conveyanacing equivalent of the poop emoji, what broker or client wouldn't choose a cashback option which coveres the costs of them choosing someone actually good that they are in control of?