Mortgage cashback: what to buy after you've bought...

by Leeds Building Society

Warning: THE MORTGAGED PROPERTY (WHICH MAY BE YOUR HOME) MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

It’s an inescapable and unavoidable fact – buying a house is expensive. Even after you’ve dotted all the ‘i’s’, crossed all the ‘t’s’ and parted with your hard earned deposit, you’ll still probably have to spend a few more pennies to make your house feel more like home. And that’s where a cashback mortgage might come in handy.

Put simply, cashback mortgages pay out an additional cash lump sum at the beginning of the mortgage, usually as an incentive to choose a particular deal. Typically offering anywhere between £200 to £1500, this initial upfront cash is often viewed as a helping hand towards a number of new home purchases.

With that in mind, we’ve made a list of some things we think you might want to prep the purse strings for, to get yourself properly set up in your new place.

You’ve made it this far after all. Surely another list can’t hurt?

1) Security first - keys and locks

Like most of us do, the previous owner of your home probably gave a key or two out to family members or neighbours for safe keeping. So for peace of mind and a little added security, it might be worth changing the locks once you’ve moved in.

You might also be asked to do this by your insurance company, to show you’ve taken necessary safety precautions – so it’s definitely worth looking into.

Whilst you’re thinking about all things security, why not explore some additional measures? These don’t have to be expensive, and could range from security cameras and burglar alarms to simple outdoor lighting.

2) Somewhere to sit and somewhere to sleep

Moving is tiring work – even if you’ve used our ‘Moving Day Survival Pack’ to get you through that first day. So once all the heavy lifting’s done, you’ll probably want to put your feet up on a new sofa or bed.

You don’t always have to go for big brands and big price tags either. If you’re less fussed about look, or you’re just after something to keep you going, it might be worth checking out second hand shops and sites. And your local buy and sell group on social media.

3) Storage

Packing all your belongings into boxes can be a little eye opening. Especially if you’ve bought with a partner, and you’re bringing two homes into one!

So whether it’s buying new cupboards and drawers for your home, or employing the use of an external storage company, you might want to save some money to save some space.

4) Big ticket electrical appliances

Thinking about the things we typically use every day, there’s a few core electrical items you might want to think about investing in:

  • Oven
  • Fridge/Freezer
  • Washing machine
  • Dryer
  • Dishwasher

That’s not to mention the smaller things which keep things ticking over, like a hoover, microwave, kettle and toaster.

Again, these items don’t always have to come with a big price tag. Why not check out second hand shops, auction houses and local buy and sell groups? Or ask family and friends to keep their eyes peeled? You never know when a sale or deal might come along.

5) Lighting

It might not be the first thing on your mind when you’ve moved, but you’d be surprised how quickly the right lighting can make your new house feel like a home. With the ability to change your mood or even create the illusion of space and warmth, there’s a lot to be said for it.

So whether it’s new light fittings, lamps, or a bigger re-wiring project – have a think about the costs involved in getting this right.

What would you spend it on?

Now you’ve heard our ideas, but we wanted to know about you…

We did an online survey* with some members of Leeds Building Society and the general public to understand their view towards mortgages which offer cashback incentives. Is it helpful towards those new home essentials, or are there other priorities at play?

Home improvements and storage solutions definitely topped the charts, with the four most popular mortgage cashback purchases being:

  • Removal/storage costs (25%)
  • Legal/professional fees (24%)
  • Immediate overpayment of mortgage (24%)
  • Payment of expected home improvements/maintenance (23%)

Unsurprisingly, a lot of buyers are highly conscious of the other costs involved in buying, like legal fees, which we talked about more recently in our Knowledge Base. In fact, our survey respondents took quite a practical attitude to spending mortgage cashback, putting it towards those more hidden costs of moving, or getting a head start on their mortgage repayments.

Interestingly, these top four choices beat out a number of other options they could have gone for:

  • Buying furniture or appliances
  • Decorating or landscaping to put your own stamp on your new home
  • Stamp duty
  • Buying fixtures e.g. new alarm system, new windows
  • Another purchase not related to the property purchase e.g. a family treat, holiday
  • Other

However digging into the detail, it also seems like different kinds of borrowers would do different kinds of things with their mortgage cashback.

Buy to Let borrowers would most likely spend it on an immediate overpayment of the mortgage (51%). Whilst a younger demographic of borrowers (16-34) would be more likely to spend it on buying furniture or other home improvements (34%). Perhaps because younger buyers are more likely to be just starting out, they’re focused on building up the basics before they tackle longer term financial decisions.

If mortgage cashback sounds like it might be of interest to you, we offer a range of Buy to Let, Shared Ownership and Right to Buy cashback mortgages. Why not take a look? Whether you’re a forward planner looking to really kick start your repayments, or you need some new kit to get you set up properly in your new home, it could be an option worth keeping in mind.

This is intended as a summary only and does not constitute financial or legal advice given by Leeds Building Society. No reliance should be placed on this guide and you must make your own decisions. We recommend that you seek independent financial or legal advice if you have any questions or queries.

Applicants must be aged 18 years or over. Mortgages are subject to eligibility, status and financial standing.

Buy to let mortgages which are for business purposes are exempt from Financial Conduct Authority Rules.

*Based on an online survey undertaken in September 2019. 218 members were surveyed by Leeds Building Society via our customer research panel ‘TalkingPoint’. A further 1006 participants from the general public were surveyed by Verve Voices, a third party provider.

talkingpoint.leedsbuildingsociety.co.uk is a site operated by Verve Partners Limited (Company Number 6663787, whose Registered Office is situated at The Clove Building, 4 Maguire Street, London, SE1 2NQ) on behalf of Leeds Building Society.