Cashback Mortgages

Cashback Mortgages
Buying a home, especially for first-time buyers can be financially pressurised. Extra cash, when you need it most, can be a particularly useful advantage of cash back mortgages for example to cover a mortgage valuation or contribute to legal costs.

As an incentive, lenders offer a lump sum of cash either once a mortgage has been taken out or upon the completion of the mortgage. Amounts vary depending upon lenders, schemes and the size of the loan from a flat fee to a percentage of the loan.

Cashback is normally offered as a package of benefits e.g. linked with a discount, but pure cashback products are not uncommon, sometimes stretching to 5 or even 6% of the loan value.

Other forms of cash back mortgage include the product being offered alongside another type of loan such as a fixed-rate mortgage or a discount rate mortgage where it's likely to be substantially smaller.

Like most loans of this nature, early repayment penalties can be expensive, and may apply for a long period (5 to 7 years where a sizeable cashback has been paid). Cash back mortgages also tend to attract higher application fees and higher interest rates

Source: MoneyHighStreet