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