We explain how you may be able to benefit from a cashback mortgage.
A cashback mortgage is one where a lump sum is paid to the mortgage applicant on completion of the mortgage. It is a scheme that is offered alongside other mortgage products. The cash can be used as you wish.
Advantages
The additional cash can be useful at a time when you may have little spare cash. The money can be used to pay solicitor's fees, buy furnishings, carpets etc. You could even put the money into a savings account and use it to assist in making mortgage repayments in the first few months or years.
Disadvantages
Early redemption penalties will almost certainly apply. This means you will be unable to change your mortgage during the 'early redemption penalty period' without paying back the lump sum received, or paying a fee, which may be up to the value of six months mortgage repayments. Consequently, you may end up being trapped in a mortgage with an uncompetitive rate.
You may have to pay an application fee when arranging your cashback mortgage.
NB This information is provided to give you an overview of the different types of mortgages available. It is not comprehensive and you should not base your mortgage decision on the information found here. We recommend you seek professional advice in order to determine the most suitable mortgage for you.
