Abbey has launched a new tracker mortgage which gives borrowers cash back at least every two years.
Called the Reward Mortgage, the new deal has a guaranteed lifetime tracker rate of 1.24% above the Bank of England base rate – currently set at 4% - and pays at least 1% cash back on the remaining mortgage balance every two years.
Based on this cash back payout, the average 25-year £100,000 repayment mortgage should see cash back payouts of around £7,000, according to Abbey, which could in turn cut the mortgage period by two years, to just 23 years, providing the cash back contributes to interest rather than capital repayment.
Along with cash which could pay the loan back early – although borrowers are not required to do so according to an Abbey spokeswoman - there are no booking fees or early redemption penalties.
All fees will have to be paid back, however, if the mortgage is redeemed within two years.
Loan and benefits can be transferred when the borrower moves home, continues Abbey, borrowers have the option of taking out a second mortgage at a later date which can be used for home improvements and pays the same 1% cash back every two years.
Any client – which appears to exclude buy-to-let customers - signing to such a mortgage through an intermediary is also being offered "free" legal and valuation, as Abbey will pick up the fees bill providing borrowers pay an extra 0.1% interest on their tracker mortgage.
First-time buyers will be offered a free valuation for mortgage purposes up to a maximum of £250 – while remortgage clients can receive a free valuation worth up to £1,100 or £2590 towards legal costs - but will only be paid back in cash on completion.
For more information, go to www.abbeyforintermediaries.com.IFAonline
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