Get your lender to pay your energy bills!

One lender will now pay towards your winter fuel bills if you take out a new mortgage.

We might not have had much in the way of summer, yet judging by the layers I’m lumping on every morning and the foggy windscreen in the morning, winter is well and truly on the way.

And that doesn’t just mean chestnuts roasting on an open fire. It also means the radiators going on and the heating bill heading northwards. However, one lender is happy to put some cash towards your bill if you take out a mortgage with them.

Halifax and your heating

Halifax and Bank of Scotland (both part of the Lloyds Banking Group remember) have launched an innovative offer for new mortgage borrowers.

Since the cold nights are closing in, the lenders have announced a scheme whereby all new mortgage customers will receive a housewarming present. Literally.

If you sign up to a mortgage from Halifax or Bank of Scotland, you will get £500 towards your gas and electricity bills. You can claim that cash at any point within the first six months of the mortgage completing. However, don’t think you can kid the lender into just giving you £500 – the money will be sent to your energy supplier direct, upon the provision of a current utility bill.

Is it worth it?

It’s a nice little gimmick, and will no doubt prove useful for some borrowers, but you’d be mad to go for a Halifax mortgage just for the sake of the £500. It’s still all down to the mortgage itself, and in all honesty Halifax mortgages aren’t exactly market-leaders.

For example, if you have a deposit of 25%, you can get a two-year fixed rate at 3.59% with a product fee of £995 from Halifax.

You can get a rate as low as 2.24% from Principality Building Society (albeit with an obscene product fee of 3% of the advance) while for a product fee of £500 more than the Halifax deal you can secure a rate of just 2.74%, again from Principality.

So the £500 is a nice bonus, but you will still end up better off going elsewhere. However, Halifax are not alone in offering such benefits in an attempt to attract new borrowers.

Cashback deals

On a similar concept to the Halifax mortgage, some lenders offer mortgages which provide you with cashback for taking them out. In most cases the cashback works out at less than the product fee you are paying for the mortgage in the first place, which makes it all just a bit pointless, but one lender has launched a mortgage paying an astonishing 3% in cashback!

Back in August, Leeds Building Society unveiled a lifetime variable product paying cashback of 3% - on a mortgage of £150,000 that works out at an incredible £4,500! Just think of how useful that money could be when starting out in a new property.

Sadly there’s a sting in the tail – the mortgage is rubbish. It’s a standard variable rate, so it can be raised at any time irrespective of what happens with bank base rate, and currently stands at 5.69%. Again, a nice gimmick, but not enough.

Insurance

It’s not unusual to get some form of insurance thrown in with your current account (and often it’s a complete waste of time, like so-called ID theft insurance), but you can also get insurance thrown in with your mortgage.

Earlier this year, Nationwide launched an innovative idea called the Protector Mortgage, only available to existing FlexAccount customers. The deal includes free mortgage payment protection insurance for two years (as well as £300 cashback for existing mortgage customers). Now payment protection insurance has a horrendous reputation, and it’s well deserved, but mortgage payment protection insurance tends to be a little more reputable and value for money.

Certainly for some borrowers, it represents a very useful addition.

However, again the mortgage is distinctly average. It’s open to borrowers with only a small deposit, between 10% and 15%, and is fixed at 5.98% for two years. There’s also a product fee of £396 and a booking fee of £99.

When you consider you could get a two-year fixed deal with a 15% deposit from the Post Office at 3.94% with a product fee of £995, is it really worth paying an extra 2% on your mortgage for the sake of some insurance you may not even need? I highly doubt it.

Getting the right mortgage

What’s clear is that while such initiatives can be pretty attractive, generally they are tagged on to mortgages that are less than competitive. It’s far more important to focus on getting the right mortgage for you, and then if there is an added facility such as cashback or useful insurance, then that’s just a bonus.

Below I’ve put together a couple of tables filled with some of the best mortgages in the market today, while if you want to take advantage of some independent advice from our fee-free mortgage team make sure you head over to our mortgage centre where you can pick their brains via instant messenger, email or over the phone.

15 fabulous fixed rates

15 tremendous trackers

At lovemoney.com, you can research all the best deals yourself using our online mortgage service, or speak directly to a whole-of-market, fee-free lovemoney.com broker. Call 0800 804 8045 or email mortgages@lovemoney.com for more help.

This article aims to give information, not advice. Always do your own research and/or seek out advice from an FSA-regulated broker (such as one of our brokers here at lovemoney.com), before acting on anything contained in this article. 

Finally, we tend to only give the initial rate of a deal in our articles, but any deal which lasts for a shorter period than your mortgage term may revert to the lender's standard variable rate or a tracker rate when the deal ends. Before you take out a deal, you should always try to find out from your lender what its standard variable rate is and how it will be determined in the future. Make sure you take all this information into account when comparing different deals.

Your home or property may be repossessed if you do not keep up repayments on your mortgage.

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