What is a Cashback Mortgage?

A cashback mortgage is a type of mortgage that gives you a lump sum of money once your mortgage begins. This is paid directly to you by your lender and is often offered as an extra benefit to make certain mortgage deals more appealing.

Cashback mortgages can be popular with people who are trying to manage the costs of moving home, as the money can help cover things like removal fees or furnishings. Whether you are a first time buyer or looking to remortgage, cashback might be something worth considering when comparing mortgage deals.

How Does a Cashback Mortgage Work?

When searching for a mortgage, you might come across something known as a cashback mortgage. This type of mortgage comes with a little extra, offering you a lump sum of money once your mortgage begins.

It’s often seen as an attractive bonus, especially if you’re a first time buyer or looking at ways to cover some of the initial costs that come with moving home.

A cashback mortgage works just as the name suggests. After completing your mortgage, your lender pays you a set amount of money.

The cashback is typically paid straight into your bank account, which can be a helpful boost when you’re dealing with expenses such as removal costs, furnishing your new home, or sorting out legal fees.

How Much Cashback Can You Get?

The amount you receive from a mortgage with cashback can vary. Some lenders offer a fixed sum, while others calculate the cashback as a percentage of your mortgage amount.

It’s worth remembering that while getting cashback might seem like a win, these deals don’t always come with the lowest mortgage rates. In some cases, a cashback incentive is added to balance out a slightly higher interest rate or fees elsewhere.

Is a Cashback Mortgage Right for You?

For home buyers trying to choose between different mortgage products, the appeal of cashback can depend on what you need most. If you’re focused on keeping your costs down upfront, a cashback mortgage deal could be worth considering.

On the other hand, if you’re aiming for the lowest possible repayments over the long term, it might be better to focus on the interest rate and overall cost of the mortgage, rather than the cashback on offer.

Can You Get Cashback When Remortgaging?

It’s also possible to look at remortgage cashback deals if you’re switching from one lender to another. These are designed to encourage borrowers to move their mortgage and can help offset the cost of things like early repayment charges or solicitor fees.

How to Compare Cashback Mortgage Deals

Comparing mortgage deals is an important part of the process, as there are so many different options out there. Cashback is just one of the mortgage incentives that lenders use to attract borrowers, but it won’t always be the best fit for everyone.

By speaking to our mortgage advisors, you can explore the deals available and find something that suits your plans. As a mortgage broker, we regularly help customers compare a wide range of products, from cashback offers to fixed rate deals.

Whether you’re a first time buyer, moving home or remortgaging, we’re here to support you in finding the right mortgage for your needs.

How is a Cashback Mortgage Different from Other Types?

Cashback mortgages stand out because they offer a financial reward at the start of your mortgage term. Other types of mortgages focus more on how your repayments are managed over time.

For example, a tracker mortgage follows the Bank of England’s base rate, so your monthly payments can go up or down depending on interest rate changes. Fixed rate mortgages, on the other hand, keep your payments the same for a set period.

While a cashback mortgage might seem appealing because of the upfront payment, it is important to weigh this against the overall cost of the mortgage. Some cashback deals may have slightly higher interest rates compared to other options, so it helps to look at the full picture when deciding what works best for you.