Buying a home comes with plenty of costs, from moving fees to furniture and decorating. So, when a lender offers to give you a bit of money back, it’s no surprise that people stop and take notice. That’s where a cashback mortgage comes in.
Let’s break down what a cashback mortgage actually is, how it works, and whether it could be the right choice for you.
What Is a Cashback Mortgage?
A cashback mortgage is a type of mortgage where your lender gives you a lump sum of money, known as “cashback”, when your mortgage starts.
Think of it as a small financial boost to help with the costs of buying or moving home. It might go towards new furniture, removal fees, or simply topping up your savings after a big purchase.
Usually, the cashback is paid on completion or shortly after your mortgage begins.
How Much Cashback Can You Get?
The amount you receive depends on the lender and the type of mortgage deal.
Most cashback mortgage offers range between £250 and £1,000, although some may offer a percentage of the total mortgage amount.
It’s not a huge sum, but it can make those first few weeks in your new home a little easier financially.
The Pros and Cons of a Cashback Mortgage
Like most mortgage options, cashback mortgages come with both benefits and things to be cautious of.
The Benefits
Extra money when you need it most. A nice financial boost to help with moving or settling in costs.
You don’t need to pay it back. Once you’ve received the cashback, it’s yours to keep (as long as you stay within the terms of your deal).
Ideal for first-time buyers – If you’re using most of your savings for your deposit, cashback can help cushion your budget.
The Drawbacks
Interest rates can be higher. Some cashback mortgage deals come with slightly higher rates, which could cost more over time.
Fees may offset the cashback. Watch out for higher arrangement fees or early repayment charges that might cancel out the benefit.
Not always the cheapest overall – The upfront cash might look tempting, but another mortgage with a lower rate could save you more in the long run.
Is a Cashback Mortgage Worth It?
A cashback mortgage can be a good choice if you need a bit of extra support when moving home, especially if your budget is stretched after paying the deposit and fees.
However, if your priority is to keep long-term costs down, a mortgage with a lower interest rate might be better value overall, even without cashback.
It’s all about weighing up what matters most to you right now versus over the life of your mortgage.
At UK Mortgage Centre, we’re here to help you make informed decisions about your mortgage. Our experts can guide you through the process, ensuring you find the best solution tailored to your needs.
Call us on 01925 573328
Email: hello@ukmc.co.uk
Or book your own appointment to speak with one of our friendly advisers.
Let us assist you in making your next move a smooth and successful one.
Disclaimer
UK Mortgage Centre is a trading style of Refresh Mortgage Network Limited. Refresh Mortgage Network Limited is authorised and regulated by the Financial Conduct Authority. FRN – 826982. Registered in England & Wales: 11614569. As a mortgage is secured against your home, it could be repossessed if you do not keep up the mortgage repayments. The Financial Conduct Authority does not regulate some forms of buy-to-let mortgages. The Financial Conduct Authority does not regulate will writing and taxation and trust advice.
