Principality Building Society has introduced the cashback discount mortgage.
Aimed at both first time buyers and existing borrowers looking to remortgage, the mortgage has a discount of 0.25 per cent for the first five years of the loan. This gives it a payable rate of 6.2 per cent for loans of up to 95 per cent of valuation.
Borrowers can also take up to 3 per cent of the value of the mortgage as cashback on completion. The mortgage has redemption penalties of 1 per cent of the advance during the discounted period, and the valuation fee is refunded. If buildings and contents insurance is not taken then an extra 0.19 per cent is added to the interest rate.
The Principality mortgage is not the most competitive five-year discounted rate cashback product on the market. This is the discount mortgage from Shepshed Building Society, which has a discount of 2 per cent for the first year, giving it a payable rate of 4.99 per cent for loans of up to 95 per cent of valuation. In year two the discount is 1 per cent, and for the next three years it is 0.5 per cent.
The Shepshed mortgage has redemption penalties of 5 per cent of the advance during the discounted period but the maximum cashback is only £500. Like the Principality product, it too refunds the valuation fee. However, it also offers free unemployment insurance for the first year.