Bank Promises to Pay First-time Buyers' Stamp Duty
So What's the Catch?
Bank promises to pay first-time buyers' stamp duty - so what's the catch?
A major lender has offered to pay first-time buyers' stamp duty - in exchange for a higher rate of mortgage interest.
Many mortgage lenders offer cashback deals but with Barclays' new mortgage the cashback element is designed to pay the buyer's stamp duty on properties worth up to £250,000.
High stamp duty is a barrier to many first-time buyers who spend years saving up a house deposit and struggle to raise the extra amount to pay the upfront tax.
The mortgage is available for first-time buyers or home movers with a 20pc deposit, and comes at a rate of 2.69pc fixed for five years.
Buyers who are purchasing a property worth £100,000 to £150,000 will receive £1,250 cashback, and buyers purchasing a property worth £150,001 to £500,000 will receive £2,500.
Mortgages are arranged before completion, but stamp duty can be paid up to 30 days afterwards, allowing buyers to use their cashback to pay the tax cost.
Is it a good deal?
The rate is considerably higher than the best-buy mortgages available to buyers with 20pc deposits, meaning the mortgage is most appropriate for buyers who have no way of paying the stamp duty up front.
The deal is best for those borrowing just over £150,000, because they get significantly more cashback than those borrowing between £100,000 and £150,000.
Borrowers who are struggling to pay the stamp duty could take on a slightly larger mortgage and use some of their cash to pay the tax instead, provided they can afford it.
Buyers who want a cashback mortgage could also consider the West Brom's two-year discount at 2.69pc, with £1,000 cashback.
The Post Office also has a five-year fixed rate at 3.14pc with £1,000 cashback. Both are available to buyers with at least a 10pc deposit.