New mortgage offers borrowers chance to earn airmiles
Lloyds TSB is offering mortgage borrowers the chance to earn 7,800 airmiles with its new range of fixed mortgages.
Customers who opt for the bank’s three-year fixed airmiles mortgage will receive a lump sum of 6,000 airmiles when they first take out the loan. They will also earn an additional 50 airmiles each month during the fixed period.
This means that after three years they will have earned 7,800 airmiles – enough for a return flight to Hong Kong or Barbados, or five return fights to Barcelona, Rome or Prague.
They could also use the airmiles to receive 19 haircuts, six trips to the theatre plus dinner for two or 10 cases of deluxe wines.
The new mortgage is the second stage of Lloyds TSB’s airmiles initiative, and follows on from its credit card last year. Rates on the airmiles mortgage range start from 5.89%. Customers can borrow up to 75% of a property’s value but will have to pay a £995 fee.
Alison Burns, director of network mortgage sales at Lloyds TSB, says: "This new deal combines some of our most competitive rates, with a genuinely useful reward package. We all enjoy the idea of getting something for free and in a time when mortgage payments are a top priority, this offer enables customers to earn rewards on their essential spending."
Sean Gardner, founder of MoneyExpert.com, says no one should ever select a mortgage soley on the basis of free flights or wine.
But he adds that with the average rate on three-year fixed deals currently around 6.44%, the airmiles mortgage is among the most competitive products available.
Gardner says: “This is a genuinely good deal and the rewards on offer are nice and simple to redeem. 7,800 airmiles are worth plenty and should not be ignored in the final reckoning if you're choosing a mortgage.”
Used by the holder to buy goods and services, credit cards also have a monthly or annual spending limit, which may be raised or lowered depending on the creditworthiness of the cardholder. But unlike charge cards, borrowers aren’t forced to pay the balance off in full every month and, as long as they make a stated minimum payment, can carry a balance from one month to the next, generating compound interest. As the issuing company is effectively giving you a short-term loan, most credit cards have variable and relatively high interest rates. Allowing the interest to compound for too long may result in dire financial straits.