cashback mortgages

With cashback mortgages, the lender gives you a single lump sum of cash either on completion of the mortgage transaction or after the first repayment.

The sum in question is either a percentage of the size of the mortgage or a fixed amount. The cash can be equivalent to between 1% and 10% of the mortgage. Some mortgages feature only a small amount of cashback, say £200 or £300.

A cashback mortgage can be useful for first-time buyers by helping to cushion the expenses of setting up home. However, repayment rates are often higher and there are usually high early redemption penalties involved should you wish to pay off your mortgage early, for instance if you wanted to switch lenders.