New mortgage helps buyers meet stamp duty costs
A new mortgage giving home buyers a helping hand to pay some or all of their stamp duty costs has been launched by a major bank.
Barclays said its homebuyer cashback mortgage is designed to help first-time buyers or home movers recover the cost of stamp duty on their new property purchases.
Borrowers will need a 20% deposit to take out the five-year fixed-rate deals, which have a rate of 2.69% and no fee.
The deals come with £2,500 cashback for people borrowing between £150,000 and £500,000. This cashback amount would cover stamp duty on properties valued at up to £250,000 - so for people buying homes worth more than this the cashback would cover a chunk rather than all of the cost.
And £1,250 cashback is available on mortgages between £100,000 and £150,000, covering stamp duty on homes worth up to around £187,000.
Barclays will give the cashback directly to borrowers, so it is up to them whether they want to use it to cover their stamp duty costs or something else, such as paying for furniture for their new home.
Stamp duty is paid by buyers on homes priced at over £125,000.
Craig Calder, director of Barclays Mortgages, said the deals would help to remove a major barrier faced by many first-time buyers and home movers.
Rachel Springall, a finance expert at Moneyfacts.co.uk, said: "Whilst the cashback from Barclays will be seen as a huge helping hand, buyers must make sure that the overall deal is the most cost effective choice for them.
"Buyers will need to stump up a 20% deposit to be eligible for the stamp duty cashback, which might not be feasible for some."
Ms Springall said some alternative deals which may not offer as much cashback may however have lower rates - so it is important for home buyers to weigh up the overall costs of the deals available.
She highlighted a deal from Principality Building Society offering first-time buyers with a 15% deposit £1,000 cashback, with a mortgage rate at 2.45% for five years, with no product fee and a free valuation.
HSBC also has a no-fee mortgage fixed for five years at 2.34% for first-time buyers with a 20% deposit, and the package covers legal fees and a valuation, Ms Springall said.