Cash Back Mortgage

Cash-back Loan

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Since the credit crisis these products have mainly been withdrawn.

Cashback mortgages potentially may give the new buyer of a property a lump sum of money on mortgage completion. This potentially may suits a first time buyer or new purchaser whereby they may be stretched for cash and wish for a cash sum in order to possibly help as their saving will be low after a purchase.

Typically this helps with home improvements, legal costs or perhaps buying new furniture and fitting for their new home. The lump sum can be spent on anything that the client wishes. Quite often the amount of lump sum will be a percentage of the mortgage advance. But the buyer is also be tied in for some years if they wish to move unless the mortgage is portable whereby they can take their existing mortgage to a new property without paying early redemption charges and in some instances they may have to repay the cashback amount.

The draw back with this type of mortgage is that often there may be large early repayment charges that may run after the initial product time is over. This can often be several years and the rate will normally be higher than other types of mortgages for example a discount mortgage. The lender's clients potentially may often after the initial rate be placed on to the lender's standard variable rate which can be relatively high.