Cash back mortgage

A cash back mortgage is one where a cash lump sum is paid to the mortgage applicant upon completion of the mortgage application.

There are two main ways a cash back mortgage can be offered by a mortgage lender.

1. A cash back mortgage with a lenders standard variable rate, this can offer a large cash back on completion of the mortgage. This cash back can be as high as 6% of the new mortgage amount and can be used for any purpose. It is worth noting that the cash back is often paid 2 to 3 weeks after the mortgage has completed, making it difficult to use for a deposit on a house purchase.
   
   
2. A cash back mortgage offered along side another mortgage product such as a fixed rate or discount rate scheme, these cash backs are usually a small amount to cover for example a refund of the mortgage valuation or contribution towards legal costs for the house purchase/remortgage.

While there may be initial advantages to having the additional cash, which can be useful at a time when you may have little spare cash. There are other considerations that you should take into account, early redemption penalties can be onerous and expensive and may apply for a long period if the lender offers large cash back incentives. You may have to pay an application fee when arranging your cash back mortgage and Interest rates tend to be higher than other mortgage products available.

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