The product, the Homebuyer Cashback Mortgage, will give first-time buyers up to £2,500 which is intended to help customers recover the cost of Stamp Duty.
Borrowers purchasing their first home with a value between £100,000 to £150,000 will receive £1,250, while those buying a property valued between £150,000 and £500,000 will receive £2,500.
Craig Calder, director of Barclays Mortgages, said: “This fee-free cashback purchase-only mortgage completely removes one of the major barriers faced by many first-time buyers and homemovers, as well as there being no product or valuation fees to pay.
“With a cashback of up to £2,500, it will help first time buyers move forward and buy their own home much sooner – with the flexibility to spend the cashback to either recover their Stamp Duty cost or however they wish.”
The rate available on the new product is at 2.69% for a five-year fix at 80% loan-to-value (LTV).
Aaron Strutt, product director at Trinity Financial, said it was “unusual” for a lender to provide enough money to cover Stamp Duty fees on a £250,000 purchase.
“If you do not need the cashback to put towards the deposit or stamp duty, then it is probably worth opting for a cheaper deal as the rate is slightly higher. Lenders are coming up with new incentives to make it easier to get on the property ladder and tempt more borrowers into action. There are 12 lenders offering sub-2% five-year fixes, although you will need a larger deposit to access them,” he added.
“Five-year deals are very popular at the moment because the rates are so cheap and borrowers like the thought of longer term payment security. Another bank offered a similar cashback scheme last year and it was incredibly popular. This sort of product allows younger borrowers to be less reliant on the Bank of Mum and Dad.”