|What are Cashback Mortgages?
Cashback mortgages provide you with a cash back payment when you take out your mortgage product. This can take the form of a percentage of your total loan or a special-offer fixed amount. The information below may help you compare cashback mortgages to get the best cash back mortgages on offer.
Cashback mortgages are ideal for:
- First-time buyers who may require more financial help.
- Any other borrower who is attracted or tempted by a cashback reward either as an initial incentive or as a regular part of a mortgage package.
What types of cashback mortgages are on offer?
Most cashback offers, even the best cash back mortgages, will probably tie you into a pre-specified mortgage deal with your lender. This usually lasts for a few years. You can apply for cashback mortgages that have standard variable or tracker rates. Some of the best cas hback mortgages offer special deals such as fixed and capped rates and discounted offers.
Generally, if your cashback mortgage is linked to another special offer deal, you will be offered a smaller sum or lower percentage as cashback. Some lenders are now creating long-term cashback mortgage deals. This means that you can, for example, secure a life tracker cashback mortgage that will provide you a cashback payment based on a percentage of your loan every few years.
With all these new varieties on offer, it is important to shop around for the best cashback mortgages and compare cashback mortgages before you decide.
How do cashback mortgages work?
- Most lenders will offer standard borrowing amounts for cashback mortgages of between 3 to 4 times a single salary and 2.5 to 3 times a couple’s salary.
- It is possible to find cash back mortgages that have more flexibility. For example, you can get cashback deals for 100% mortgages. Certain lenders will even consider giving out loans of more than 100% of your property value.
- The standard deposit required for cashback mortgages are around 5%.
What are the benefits of the best cashback mortgages?
- Young first time buyers will probably appreciate cashback mortgages most of all. With the huge expense of buying a house, cashback rewards come in handy to cover other expenses such as furniture.
- One of the best cash back mortgages on offer is the long-term package. You will be offered a cashback sum every few years based on the value of your mortgage. It is up to you to spend the cash in any way you wish or use it to offset it against your loan.
Cashback mortgages may seem attractive at the beginning. For example, some deals start you off straightaway on standard variable rates. It may, in fact, be a better option to enjoy the benefits of a special deal for a few years rather than receive a cashback reward. It is crucial to compare cashback mortgages with other more standard mortgages before you make a final choice.
It is possible to arrange special deals such as capped rates, fixed rates, or discounted rates with a cash back mortgage. However, the downside is that the cashback you will receive will probably not be as significant. Some lenders may charge redemption penalties or exit fees if you switch or move deals. Others may charge mortgage indemnity fees if you borrow over a certain percentage of the value of your property, although these vary according to the lenders.
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