Cash Back Mortgages
Why should I consider a cash back mortgage?
Cash back mortgages are predominantly aimed at first time buyers who are looking to climb the property ladder and possibly looking for some additional incentives.
Purchasing a home is very expensive, you will be faced with legal fees, stamp duty, moving cost and possibly even remedial or decorating costs. The money you receive in the form of acash back can really be used for anything. Most people will put it towards a cost initially associated with their house move.
How much cash will I get?
When it comes to cash back mortgages the levels of cash back you receive will vary upon lender to lender. Some lenders will have a set figure of cash back and others will base the cash back on a certain percentage of the overall loan.
When do I receive the cash back?
When taking out a cash back mortgage you will probably receive your agreed level of cash back once the mortgage application process has been completed.
Cash back mortgages examples
Many cash back loan providers will offer cash backs on percentages such as 1%, 5 or even 10% of the total mortgage you take out. A borrowing of £200,00 with a cash back of 5% would equate to £10,000.
More than likely cash back mortgage providers will offer fixed cash back offering between £100 and £1000.
What are the benefits of cash back mortgages?
Most people would agree that the money they have received when their cash back mortgage application had completed was useful in some way. Having some additional finances available at the time of purchasing your house can certainly help.
What are the disadvantages of cash back mortgages?
As well as the positives of this product, there are also some considerations you need to make such as if the lender has imposed any timescales on repayment. If you are likely to pay back the borrowing sooner you may need to give a lump sum back.
More than likely you will be put on the lenders standard variable rate for a given period, this may not necessarily be the most cost effective mortgage product available in the market at that time.