Cashback Mortgage

A Cashback mortgage is a type of mortgage where a borrower gets the funds to buy a house but also a cash lump sum. This can be up to 6% of the cost of house. For example if you borrow £100,000 to buy a house. You could take out a mortgage for £106,000 so you have £6,000 to spend on furniture and other costs of moving.

Advantages of Cashback Deals

  1. Popular with first time buyers or people who need to spend a lot of money on rebuilding the house.
  2. May be better rate of interest for borrowing money than standard bank loan.
  3. Many first time buyers are now struggling to raise enough just for buying house


Disadvantages of Cashback Deals

  1. Often cashback deals are a marketing gimmick used to try and tie in borrowers to a new mortgage deal.
  2. Do make sure you shop around to see whether there is not a cheaper way to borrow money. E.g. bank loan, credit card deals.

– May be a good idea if you buy a cheap house that needs a lot of renovation work.