Compare cashback mortgages

Cashback mortgages pay a cash lump sum if your purchase is successful. Compare the interest rates and fees of every mortgage that offers cashback to see which deals are the most competitive.

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What is a cashback mortgage?

Cashback mortgages give customers a cash lump sum, or cashback, when they buy a property. The cashback is paid out when the mortgage starts and can be worth hundreds or even thousands of pounds.

Cashback mortgages – also called cash back mortgages – are popular with first-time buyers eager to make some money. But, long term, they can often be more expensive than the best first-time buyer mortgages as interest rates tend to be higher.

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How do cash back mortgages work?

Some mortgage lenders offer cashback as an incentive to convince you to borrow money from them instead of one of their competitors. They’ll let you know how much you could earn upfront. Usually, the rates will be either a percentage of the purchase price (e.g. 1%) or a flat fee (e.g. £500).

Generally, each lender will have different terms and conditions associated with any cash back, and you should read these carefully. They will explain when you get the money and other important factors, such as early repayment fees and interest rates on the mortgage.

Some lenders give you the money as soon as you complete, whereas others only pay once you start making mortgage repayments. Often they pay a lump sum into your bank account, but sometimes the lender sends the cash to your solicitor to cover their fees.

How to find the best cashback offers

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Criteria for cashback mortgages

To qualify for a cashback mortgage, you will need to meet the lender’s eligibility requirements. 

This includes the standard criteria for securing a mortgage, including having a deposit saved and proving that you can afford repayments. 

But for cashback mortgages, there are often special criteria that you must also meet, including:

  • Saving into the lender’s cashback-based savings account

  • Holding your current account with the lender

Some lenders restrict their cashback incentives to first-time buyers, but there are also cashback mortgages for those remortgaging. 

If you are unsure if a cashback mortgage is right for you, speak to a mortgage broker before committing to anything.

Should I get a cashback mortgage?

Getting a cashback payment with your mortgage can be tempting as the extra money can take the sting out of other costs such as solicitor’s fees and moving costs. 

However, these mortgages do not always offer the best rates and can end up costing you more overall. That means it is really important to do your sums and make sure that the mortgage is right for your circumstances.

You need to consider the interest rate carefully, as well as other factors, such as early repayment or overpayment penalties. A cashback mortgage may not be worthwhile if the lump sum is less than the interest you will save by taking out an alternative deal.

For example, if your mortgage cashback is £500, and you would save £600 more over the term with a different type of mortgage, the cashback is not worth it.

Watch out for charges when applying for mortgages with cashback, as the mortgage fees may cost more than you get back.

To work out if a cashback mortgage is worth it:

  • Check how much you will repay each month over the deal’s term

  • Compare the monthly repayments with non-cashback mortgage deals

Advantages of cash back mortgages

  • You will receive a cash lump sum that can be used as you like

  • The funds can help reduce the overall costs associated with buying a new home

  • Some lenders offer to cover the costs of removal fees or legal costs which can save you money

Disadvantages of cash back mortgages

  • Interest rates can be higher, which means your monthly payments will also be more expensive

  • Mortgage fees on cashback mortgages can also be less competitive

  • There might be tighter restrictions on mortgage overpayments and early repayment penalties

Cashback mortgages FAQs

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