The cashback mortgage is a popular type of mortgage that provides you with a lump sum in cash when you complete the mortgage agreement. It might also be calculated as a percentage of the loan made as a cash payment to you at that point
The timing of the cashback payment usually means you receive it a couple of weeks or so after you have completed the loan. This means it is unsuitable for use as part of a deposit on a property.
Cashback deals are available on both standard rate and variable rate deals, so it is worth looking around to see what is available. The loan to value (LTV) rate varies hugely between deals too, with some requiring 60% and others more relaxed with an 80% LTV or more.
The available amount of cashback depends on the size of your mortgage and on the maximum applicable to a specific deal. When comparing cashback offers, you should see a maximum cashback amount indicated in writing.
It is worth noting that while receiving a cash payment seems like a great deal, it may not be as good as you think. Interest rates on cashback loans are typically higher than those on deals that do not offer the perk. Look at the possibility of early redemption penalties too. While these can apply to all home loans, the terms could well be longer and stiffer for deals involving cashback. Be very sure the deal you have is a good one; it is easy to be swayed by the temptation of a few hundred pounds cashback upfront when it may not be the best deal.