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The small deposit mortgages with a £1k sweetener, could you save money with Clydesdale and Yorkshire's home loan?

Published: 08:30 EST, 24 April 2015 | Updated: 08:30 EST, 24 April 2015

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Clydesdale and Yorkshire Bank have embarked on a new attempt to woo borrowers with the launch of a £1,000 cashback offer on its mortgages.

The lenders are offering a fee-free range complemented by £1,000 back until 9 June.

The rates on offer are by no means the lowest, but could the cashback make them worthwhile?

Cashback: Clydesdale and Yorkshire are offering £1,000 with some of their mortgages

Cashback is a popular tool used by banks and building societies to get customers through their doors.

The offer of free money alongside your home loan can be tempting, but it is important to check that you are not paying a premium on the mortgage rate to cover the cost.

Clydesdale and Yorkshire are offering two-year fixed rate deals for a 10 and 15 per cent deposit with no fees and £1,000 cashback.

For the deals to be worth it they have to work out more than £1,000 cheaper when compared against the lowest rates.

Remember it is not just the rate that is important, but the lender you are dealing with and you need to be happy that any concerns will be addressed and that you will be supported through the process.

Clydesdale Bank has built up a poor reputation for customer service. The bank was fined £20.5million earlier this month for mis-selling payment protection insurance after up to 42,000 compensation claims were found to have been unfairly rejected.

In September 2013 Clydesdale was fined £8,904,000 by the FCA after an error was discovered in the way it calculated some of its customers' mortgage repayments.

We compare the deals below.

15 per cent deposit

Clydesdale and Yorkshire are offering a fee-free two-year fixed rate at 2.99 per cent.

A 25-year £150,000 mortgage would cost £710 a month and £17,052 over two years. But this cost is cut once you take account of the £1,000 cashback.

In comparison, the Co-operative Bank offers the lowest two-year fixed rate on the market for a 15 per cent deposit at 2.29 per cent with a £999 fee.

A 25-year £150,000 mortgage would cost £629 a month and £16,592 over two years.

This is cheaper than the Clydesdale and Yorkshire rates, but the £1,000 cashback would wipe out the £460 difference.

10 per cent deposit

For a smaller deposit, Clydesdale and Yorkshire have a fee-free rate of 3.59 per cent with £1,000 cashback.

A 25-year £150,000 mortgage works out at £758 a month and £18,196 over two years.

In comparison, Leek United has a lower rate of 2.79 per cent and fee of £495 for a two-year fix.

A £150,000 mortgage would cost £695 a month and £17,176 over two years. This is £1,020 cheaper than the Clydesdale and Yorkshire rates, meaning the cashback wouldn't make any difference.

True Cost Mortgage Calculator

This mortgage payment calculator will allow you to see the effect of sneaky arrangement fees on your repayments. Use the second part of the calculator to compare deals.

Monthly payment

Find out monthly payments and compare the cost of mortgages over the initial deal period including arrangement fees.