A cashback mortgage entitles you to receive a single cash lump-sum at the time you take out your mortgage.
The amount you receive is generally based on a fixed percentage of the whole mortgage but in some circumstances can also be an agreed amount.
How does a cashback mortgage work?
If you were to take out a mortgage of £100,000 with a 3% cashback, you will receive £3,000 on completion. It is important to consider that your monthly repayments will usually be linked to a variable rate, meaning the amount you pay may fluctuate in line with interest rate changes.
Advantages of a cashback mortgage:
- You will receive money at a time when you may need it the most
Disadvantages of a cashback mortgage:
- Your rate is unlikely to be as attractive as other rates
- Your cashback will not be available after completion
- Early repayment penalties can be costly