Cash back mortgages generally pay out a cash lump sum to the mortgage loanborrower upon the completion of the mortgage. However, this is offered in different ways.
How do cash back mortgages work?
There are two principal ways in which cash back mortgages are offered by mortgage lenders. For instance, cash back mortgages may be offered at a lenders standard variable rate. The cash backoffered in this case can be as high as 6 per cent of the new mortgage amount, and the borrower can choose to spend it however they please. The cash back is usually paid out between 2 and 3 weeks following completion on the mortgage.
What does the other form of cash back mortgages entail?
Other forms of cash back mortgage include the product being offered alongside another type of mortgage loan. For instance, a cash back mortgage that is offered alongside a fixed-rate mortgageor a discount rate mortgage is likely to be substantially smaller. Generally, this type of cashback mortgage is used to cover a mortgage valuation, or contribute to legal costs of the house purchase.
What are the advantages and disadvantages of a cash back mortgage?
Buying a house, particularly for first-time buyers, can be financially pressurised. Spare cash, when you need it most, can be a particularly useful advantage of cash back mortgages. However, like many loans of this nature, early repayment penalties can be expensive, and may apply for a long period. Cash back mortgages also attract higher application fees and higher interest rates.
How do I find a cash back mortgage?
For more information about cash back mortgage loans and to get a cash back mortgage loan quote, please use our Mortgage Enquiry Form and one of our experts will contact you for further assistance.