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Sharp rise in mortgage freebies

Mortgage lenders are increasingly using freebies to attract customers as it gets harder to compete on price.

The number of mortgage products offering an incentive package or other freebies has increased by nearly a third in five years, according to Moneyfacts.co.uk.

Two years ago there were 2,051 mortgages with an incentive package, today that figure has risen to 2,667, a rise of 30%.


Over the same period the total number of mortgages rose just over 5% from 3,453 to 3,642.

Charlotte Nelson, finance expert at the site, said: “The incentive package has become one of the most popular weapons in a provider’s arsenal when it comes to attracting borrowers.”

With rates at record lows providers are looking for new ways to compete and attract borrowers, Nelson said. “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.”

Nelson said that incentive packages, particularly cash rebates, are especially appealing to first-time buyers. “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.”

Nelson warned that more choice can make it difficult to compare options and gauge the potential benefits of an incentive package.

“Freebies are always appealing but borrowers shouldn’t choose a mortgage based on its incentive package alone.”


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