Buying a home is expensive, which is why Halifax is offering first-time buyers and home movers a £500 gift card for Currys PC World when they apply for a mortgage. The idea is that this perk will ease the financial pressure on buyers as they furnish their new homes.
Perks and freebies may be tempting, particularly if you are buying a home on a budget, but when you are making a decision as important as which mortgage to go for you need to look beyond such gimmicks. Look at the overall cost of the mortgage over time to compare like with like and see how much the perk is actually costing you. It may work out cheaper in the long run to opt for a mortgage with a cheaper rate and no perks, for example.
For example, if you borrowed £250,000 to buy a £500,000 property, then Halifax offers a two-year fix pegged at 1.74 per cent with £999 fee, £465 valuation fee and £2,000 cash back. This costs £24,534 over the two years. The next best-priced deal is Nationwide’s two-year fix pegged at 1.59 per cent with the same £999 fee, a free valuation and £500 cash back. This costs a total of £24,770 over the two years, so the Halifax deal is cheaper.
However, if the mortgage is bigger, then the cost over two years changes. If you are borrowing £400,000 on a value of £800,000, for example, then the Nationwide deal costs £39,320 over two years and is cheaper than the Halifax deal with a total cost of £39,493.
If you are struggling with the sums, a broker can help.