What is a cash back deal?

Some mortgage deals offer cash back as an addition. The lender will pay you a cash lump sum once the mortgage has been set up to use in any way you wish. The amount of cash back available depends upon the lender and type of deal, and sometimes the amount borrowed.

There are two different types of cash back deals, they are as follows:

1. The deals that pay a fixed sum, often between £100 and £1,000.

2. The deals that pay you a certain percentage of the amount you borrowed, often between 2 and 6 per cent.

The Advantages of cash back.

1. Cash back can be extremely useful as you can use it however you want, whether it’s a few home improvements, some new pieces of furniture or a small break away.

The Disadvantages of cash back.

1. It is a known fact that mortgages offering cash back are not the best deals on the market. However, if you are sensible with your cash back and invest it wisely, maybe to pay off a few more re-payments, then it could work out relatively cheap.

2. Deals with large amounts of cash back usually attract early repayments charges, which you are expected to pay if you repay the mortgage off early. This can often amount to hundreds, even thousands of pounds.