Cash Back Mortgages

A cash back mortgage offers you the opportunity to receive a cash lump sum, usually at the commencement of your mortgage. This may be an agreed percentage of the amount that you borrowed or a fixed amount.

Cash back mortgages often offer a cash sum for amounts such as 1%, 5% or even 10% of the mortgage amount. So, if you borrow £100,000 and the cash back is 4% of the mortgage loan, you would receive £4,000 on completion of your house purchase or remortgage.

Cash back deals that pay a fixed sum are typically available for amounts between £100 and £1,000.

Cash back may also be a feature added to one of the different mortgages types.

Advantages of a Cash Back Mortgage

• The cash back sum can be used to pay for items such as home furnishings, to pay off a credit card debt or to assist with the initial costs involved in purchasing a home e.g. solicitors fees

Drawbacks of a Cash Back Mortgage

• An early repayment charge may apply for a set period, which could be the equivalent of paying back all of the cash you received
• For a larger cash back, you may find that the interest rate payable is not particularly competitive and may be a variable rate
• There is generally an arrangement or booking fee payable for a cash back mortgage