Teacher's Building Society has introduced the cashmaster mortgage plan, a five-year discounted rate mortgage with a cashback.
This mortgage is available for loans of up to 95 per cent of valuation and has a 0.25 discount for the first five years. This gives a current payable rate of 6.49 per cent and borrowers who redeem during the discount rate period must pay 4 per cent of the sum repaid as a penalty.
The cashback offered depends on the size of the loan. Borrowers with a mortgage of up to 75 per cent of valuation get a cashback of 2.5 per cent of the loan and those with a mortgage of up to 95 per cent get a 2 per cent cashback. There is no arrangement fee.
According to Moneyfacts on August 13, 2001, Principality has a similar deal for loans of up to 95 per cent of valuation which has a more competitive rate. It has a 0.86 per cent discount until November 30, 2006, giving a current payable rate of 5.34 per cent. There is a £250 cashback and if the mortgage is paid off during the discount period, the cashback is reclaimed.
Some borrowers may feel a bigger discount is more important than a large cashback and these borrowers are likely to go for the Principality mortgage. However, if the borrower is looking for a large cashback, they may be tempted by the Teacher's Building Society mortgage despite its hefty redemption tie-in.