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
- Popular with first time buyers or people who need to spend a lot of money on rebuilding the house.
- May be better rate of interest for borrowing money than standard bank loan.
- Many first time buyers are now struggling to raise enough just for buying house
Disadvantages of Cashback Deals
- Often cashback deals are a marketing gimmick used to try and tie in borrowers to a new mortgage deal.
- 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.