Compare Cashback Mortgages

What is a cashback mortgage?

A cashback mortgage offers borrowers a cash lump sum once they complete on their new home or finalise their remortgage. Cashback mortgages usually pay out the money before monthly repayments start, so they can be a good way to deal with initial expenses.

How does mortgage cashback work?

When you consider a cashback mortgage, your prospective lender will tell you before you apply how much cashback you will be paid as part of taking out the product. This money is then paid out after you have completed your purchase or finalised your mortgage.

Once you have been sent your mortgage or remortgage cashback, you are free to spend it on whatever you like. It may be useful for any purchases related to moving or improving your home, but it is not a condition of the payment.

If your chosen cashback mortgage comes with charges if you want to overpay on a fixed- mortgage, you may find that the money you gained through the cashback is quickly overtaken by the fees you would need to pay for making an overpayment.

Can I get a cashback mortgage?

You will need to meet the lender’s specific criteria for the cashback mortgage you want to apply for. This might require you to already be a customer with that bank or hold a specific current account, while some lenders offer cashback mortgages exclusively to first-time buyers.

If you already own your home, remortgage cashback may also be available. You may find this is an option you want to consider if your current deal is coming to the end of its deal period. However, there may be standard remortgage deals, which offer a lower interest rate or are cheaper overall.

Are cashback mortgages a good idea?

Cashback mortgages will work for some borrowers, but not for others. It can be a way to get a cash boost for the expensive task of moving home, but it is likely to land you with a higher interest rate that means you pay more in the long run.

Whether a cashback mortgage is right for you will depend on the particular circumstances of your move or your remortgage. It will also depend upon the interest rates you are offered on cashback mortgages and standard mortgages – essentially how much extra you will pay in order to get the cashback.

A seemingly small interest rate rise can make a big difference, especially if your mortgage has a long fixed term, such as five years or more.

It is important to think about how badly you need the cash and what you need to spend it on.

What are the benefits of a cashback mortgage?

Buying a house can be expensive and receiving a cash lump sum on completion can help cover some of the costs of being a homeowner, such as buying furniture or paying for renovations. A cashback mortgage can also help to balance out lending fees and conveyancing costs. It is still important to consider the overall cost of the mortgage and the initial interest rate you are offered, but that extra cash could be important to some home buyers.

What are the disadvantages of a cashback mortgage?

Cashback mortgages often have higher interest rates than their standard counterparts from the same lender, or different products from an alternative lender. You may therefore find that while you get a cash lump sum, you are then paying for that through a higher interest rate, or a product fee. Product fees can easily eat into some or all of your cashback mortgage bonus.

If the cash is not essential to your remortgage for house purchase, you may find that taking out an alternative mortgage with a lower interest rate is a cheaper option in the long term.

Cashback Mortgages FAQ