According to research by Which? one-third of buy-to-let mortgages now come with cashback to entice landlords looking at refinancing their portfolios.
Which? analysed data from Moneyfacts.co.uk and found that the number of buy-to-let deals offering cashback incentives has increased significantly since January when just a quarter of fixed-rate mortgage products offered some form of cashback. Remortgaging deals with a cashback incentive have also increased by the same margin in the same time frame.
Big incentives on five-year fixes
The cashback deals available vary from lender to lender, ranging from £250 to a substantial £1,000, with greater incentives available on five-year fixed rate deals, which currently make up 46% of all buy-to-let products.
According to the data, at 60% loan to value (LTV) seven of the cheapest deals come with cashback of between £400 and £500 for buyers, and eight out of ten deals for remortgaging landlords are also offering a cashback incentive.
Plenty of choice for borrowers
The advice to borrowers is not to get waylaid by cashback incentives. While they look attractive, landlords need to consider the bigger picture, i.e. how does £300 cashback look against a fee of £1,995 to secure a mortgage deal?
The good news is that the average rate on a buy-to-let fixed-rate mortgage has fallen by 0.15% since the start of this year, and five-year fixes at 75% LTV have dropped double that by 0.32%. In fact, landlords looking to secure a new mortgage or refinance an existing one have lots of choice with just 0.05% between the top 10 75% LTV deals.
Right now landlords have plenty of scope to hunt down the best deal, and possibly get a cashback bonus at the same time.