Joseph Brookes runs PBS Mortgage Solutions in Bolton. He started working independently as a broker under the Intrinsic network, six months ago, following 10 years with RBS.
His clients are extremely varied, although he deals with a large number of high LTV cases on modest loan sizes. Increasingly, he has found that cashback options are proving popular with his clients and stacking up well on costs.
He explains a recent case where the cashback enabled the borrower to go ahead with his purchase and get the property he wanted without delay.
“Paul came to me for mortgage advice earlier this year. He’s in his thirties, works in financial services and was living with his parents.” said Joseph.
“He was looking to buy his own home on his own, and had scraped together enough to cover 10% of the purchase price. He was looking for a relatively high LTV deal, and his budget was tight.
“He needed a little more money to cover buying costs, or he would have to wait a few more months until he could save more, which meant potentially losing the property. The property was a three-bed terraced house in Bury, Greater Manchester, costing £90,000, in exactly the location he preferred.
“Luckily, we found him a deal that meant he didn’t have to miss out on this house.”
The fee-free cashback mortgage from the Post Office, provided by Bank of Ireland UK, offered Paul the ability to go ahead with the purchase now. His upfront costs were minimised and the £1,000 cash helped cover his moving costs, so he could get on with the purchase. In fact, the cashback was literally used to pay his legal costs and the conveyancing firm took its fee from the advance on completion day.
“I use Post Office Mortgages regularly because their rates are attractive, fees are transparent, the cashback deal is very competitive on modest loans and the underwriting system is the best I’ve dealt with. Some lenders offer a smaller cashback but charge a mortgage fee, but I prefer this product because it’s very easy for the client to understand.”
“The deal has now completed and Paul is really pleased to be in his home,” said Joseph.
“This sort of cashback deal works well with smaller mortgages like the example above, where the fees make a large difference to the overall cost, but a small difference in interest rate doesn’t have such a big impact.
“In this case the cashback deal was the best overall on total cost, but sometimes it is about more than that for clients, especially those on modest incomes. People want to have the lump sum of cash in their pocket, to cover fees or to spend on whatever they choose, and they often prefer that to a £20 a month saving.
“This client was instantly drawn to getting the £1,000 cashback and the fact he could be moving sooner than expected.”
The larger the mortgage, the more interested the client becomes in rate, and cashback isn’t always as important, Joseph explained: “Wealthier clients have readier access to cash to pay their upfront costs now. Understanding these differences in how your client manages their finances helps you find the right product for their needs.”