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Society blundered in cashback fiasco

Loughborough Building Society has withdrawn a mortgage that could have cost it dearly with 10,000 cashbacks being offered to borrowers.

The variable rate deal of 6.1 per cent offered 7 per cent cashback up to 10,000 with no early redemption charge on the mortgage.

Customers with equity in their homes could haved remortgaged and repaid the entire amount almost immediately, making 10,000.

Chief executive Stephen Peete says: “A mistake has been made and the product has been withdrawn. The reports that we could have lost millions have been exaggerated. We are a small society and the 2m that we had set aside for this deal is tiny. We have no cashback products at the moment but are looking to launch one in November.”

Mortgage Force chief executive Rob Clifford says: “Cashback options are widely available but the redemp- tion penalties usually make the cost of making payments prohibitive. Some people take the cash and put it in an offset account – and I say why not?”

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