The benefits of a UK cashback mortgage

A UK cashback mortgage provides a cash back rebate on completion of the property purchase The cash-back sum is either a percentage of the advance, or a fixed amount

This cash-back may help you to cover some of the expenses of setting up home. However a UK cashback mortgage tends to be more expensive than a standard variable loan over the long term, due to higher interest rates and other charges levied by the lender.

benefits

With a UK cashback mortgage you receive a cash back rebate from the outset. The cash-back amount is usually between 3 - 5% of the loan value which may help you cover some of the initial expenses of moving, or buying new furniture, etc.

If interest rates don't move higher, and providing you can re-mortgage either without penalty or for a low penalty amount, you may find that the cash back sum received may be higher than any redemption penalties. In other words under 'perfect' conditions you may be able to re-mortgage and come out ahead after paying penalties.

risks

A UK cashback mortgage is often subject to higher repayment rates, and may include penalties for repaying the loan early.

The higher interest rate on a cash-back mortgage, and any increase in interest rates will eventually eat up any benefit from the cash-back sum, over the long term.

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