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What are cashback mortgages

Cashback mortgages, although open to anyone, are often aimed to interest first-time-buyers. This is because many first-time-buyers have a limited amount of cash, therefore a lump sum once their purchase completes is an attractive offer. Not all cashback mortgages offer the buyer a lump sum at the end of the deal. Some offer it at a specified time during the mortgage repayment term and others even offer at the beginning of the agreement.

The cashback sum can be as much as £6,000 depending on the size of a person's mortgage. The bank or building society do not stipulate how this money should be spent although many people use it for refurbishment and other costs. Some cashback mortgages do not offer an actual cash bonus but rather an offer that results in the buyer saving money. This may be an offer to pay all or part of the home buyer's legal fees, to pay for a full survey of the property or to not pay anything for the first six months. Some lenders also offer cash holidays, meaning a homeowner can stop paying their mortgage for a period of time. This is known as a repayment holiday and many people choose this option if they lose their job or if they are seriously ill. You should always contact your mortgage lender before you stop paying your mortgage to avoid misunderstandings and unwanted charges.

Woolwich building society offer one of the best cashback mortgages on the market. Not only do they offer the buyer £200 in cash, they also pay for the property's valuation fees. Leeds Building Society offer up to £4,000 cashback, however their repayment interest rate is among the highest at 5.8%.

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