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Last updated
June 12th, 2023

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 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.

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 other important factors, such as any early repayment charges 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.

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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're 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.

However, these mortgages do not always offer the best rates and can end up costing you more overall. 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 and disadvantages of cashback 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
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

When do you get the mortgage cashback?

Most lenders will pay the cashback money following the completion of the mortgage application. However, some lenders will wait for the first mortgage payment to go out before paying the cashback lump sum.

What are the interest rates on cash back mortgage deals?

It varies from lender to lender, so it is really important to shop around and do your sums carefully. Generally, cashback mortgages charge higher interest rates, which means they could cost you more over the long term. You want to carefully balance how much cashback you could get with how much interest you’ll pay.

Can I get mortgage cashback twice for a joint mortgage?

No, lenders only offer one mortgage cashback payment per application rather than per person.

Am I guaranteed to get the cashback?

No, each lender has its own eligibility criteria that you must meet to qualify for any cashback. Check with the provider before you apply.

Can I use the mortgage cashback for anything?

Yes, the cashback you receive can be used for any purpose, including home furnishings or repaying debt.

Can I get cashback when I remortgage?

Yes. Some lenders offer cashback on remortgage deals, but the mortgage rate may also be higher.

Can I get cashback on mortgage payments?

Cashback mortgage deals only pay a one-off lump sum at the start of your mortgage, not regular cashback in monthly instalments. But you can get a current account that will pay cashback on your monthly mortgage repayments. Usually, you need to have both your current account and mortgage with the same provider to get regular cashback.

Are cashback mortgages a first-time buyer's best buy?

You need to check whether the cashback offered is more than any interest you would save by choosing a different type of mortgage. If it isn’t, you may find it’s better to apply for a mortgage that doesn’t offer cash back.

How much of a mortgage cashback could I get?

It varies depending on the lender, but the cashback sum could be between £200 and £1,000. Or you might be given a percentage of the mortgage loan itself.

About the author

Atousa Cunnell
Atousa is a Content Producer for, responsible for writing and editing a wide range of mortgage content that are helpful to the reader. is not a mortgage intermediary and makes introductions to Mojo Mortgages to provide mortgage solutions. and Mojo Mortgages are part of the same group of companies. is a trading name of Dot Zinc Limited, registered in England (4093922) and authorised and regulated by the Financial Conduct Authority (415689). Our registered address is: The Cooperage, 5 Copper Row, London, England, SE1 2LH.

Mojo is a trading style of Life's Great Limited which is registered in England and Wales (06246376). We are authorised and regulated by the Financial Conduct Authority and are on the Financial Services Register (478215). Mojo’s registered office is The Cooperage, 5 Copper Row, London, SE1 2LH. To contact Mojo by phone, please call 0333 123 0012.