Cashback Mortgages

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A Cashback Mortgage essentially provides customers with a cash incentive for completing their mortgage agreement with a particular lender.

Often once the mortgage has reached its end, the customer will be given a cash free lump sum to spend on whatever they wish.

Cashback mortgages are available from some UK lenders and are often provided for new homeowners to provide helpful extra cash for covering costs in setting up a new home. The following should be considered if you are looking at a cashback mortgage

• Like many other mortgages, some cash-back mortgages may include charges and early redemption fees
• As is also the case with many other types of mortgage agreement, customers may be expected to pay an application fee for setting up a mortgage
• The starting interest rates on cash-back mortgages are sometimes higher compared to other types of mortgage deal

While these points are worth taking into consideration, it may still be possible to find a deal on a cash-back mortgage. For more information on cash-back mortgages see the tables above.

Customers who are considering a cashback mortgage should also take care to carefully decide on the type of repayment plan that will be best suited to them.

The following is a brief explanation of each method:

Repayment Mortgages – Using this type of repayment plan, the provider will expect the customer to repay a portion of the initial loan, plus interest, every month until entire loan has been repaid. Using a cashback mortgage, the customer may also receive a cash sum after the loan has been completely repaid.

Interest Only Mortgages – Interest only mortgages allow customers to repay the interest on their loan without having to worry about the borrowed capital initially. Although they will be expected to repay this amount in full once the mortgage period has ended.