Leeds Building Society has launched two new interest-only mortgages with a string of added incentives, in a bid to attract more remortgaging business.
Customers signing up for the new mortgages will be eligible for £1,000 cashback, as well as free valuations and fees-assisted legal services for standard remortgages.
Both deals offer two-year fixed rate mortgages at 2.09 per cent on mortgages with up to 60 per cent loan to value (LTV), or 2.24 per cent on up to 75 per cent LTV.
“More choice is returning to the interest-only market and these new products with incentives complement our existing range,” said Jaedon Green, Leeds Building Society’s director of product and distribution.
“Activity last year suggests borrowers with interest-only and part-and-part mortgages are more likely to remortgage, compared to capital and interest borrowers, and we’d expect even more of these homeowners to take advantage of current low rates and switch to a better deal.
“Many interest-only borrowers may have felt deserted by lenders in recent years but this sector remains a clear and successful focus for Leeds Building Society. With the incentives our latest products include, we’d expect the part-and-part deal to be of particular interest to interest only borrowers seeking to remortgage.”
Advisers pointed out that the £1,000 cashback would particularly appeal to smaller loans, but warned that these incentives should be viewed in the context of the overall offering.
“Leeds have done very well indeed with their big incentive products and a substantial cashback is always welcome and would certainly be welcome for smaller loans,” said Peter Gettins, product manager at London & Country Mortgages.
“But beyond that, 2.09 per cent looks like quite a high rate for a two year fix at that LTV, so it’s really going to depend on how that package stacks up, especially when you bear in mind that there are fee-free rates and five-year rates below two per cent at the moment.
“We’ve seen more and more lenders offering free valuation on purchases and some who will give £350 to £500 cashback on purchases in addition to the standard valuation and legal costs for remortgaging.
“It is absolutely an area of increasing interest and it’s a way of differentiating themselves in a crowded marketplace when interest rates are so low across the board.”
Both of the new Leeds deals are subject to a completion fee of £1499.