Hinckley & Rugby Building Society has launched a new cashback mortgage with no completion fee.
The new residential mortgage is a two-year fix that offers £500 cashback, with an interest rate of 2.55 per cent.
There is a £199 application fee but no fee on completion. The product is available at up to 90 per cent loan to value.
This is the first time Hinckley & Rugby has offered a cashback mortgage in about 20 years.
Hinckley & Rugby head of sales and marketing, Carolyn Thornley-Yates, said: "Whether it’s to pay for removal costs or to finance a start on decorating a house to make it your home, buyers will always find a good use for £500 when they move in.
"Our borrowers are free to do whatever they want with the money. And because they also have the certainty of what their monthly repayments will be for two years, this new cashback mortgage should particularly appeal to first time buyers after they’ve paid their deposit.
"Applicants, and their broker, if they are using one, will also benefit from our traditional levels of one-to-one service and our manual underwriting which considers the circumstances of each applicant without credit scoring."
Cashback mortgages have become more widespread in recent years.
In November data from Moneyfacts suggested the number of 1,459 products available with a cashback incentive was nearly two-and-a-half times greater than the number in November 2011, when it stood at 627.
These deals made up 29 per cent of the overall mortgage market at this point, a marked increase from the 19 per cent seen in 2011.
Darren Cook, finance expert at Moneyfacts, said at the time: "An incentive of cashback to assist landlords in covering the costs of a buy-to-let mortgage is becoming a more prominent feature of the buy-to-let market.
"Especially considering last year’s upheaval in this sector, landlords will be looking for any way to cut costs and increase their margins. It seems that providers are obliging."
In September Halifax reintroduced its £1,000 cashback offer for a limited period.
Earlier this month Leeds Building Society doubled the cashback incentives available on selected two and five-year buy-to-let mortgages to £1,000.
carmen.reichman@ft.com
