Cash back Mortgages - upon completion of the property purchase, you receive a lump sum of cash , this cash could be a percentage of the mortgage or a fixed amount.
Cash back Really?
This is a bit misleading as you do not actually get your "cash back" instead an additional loan is added onto the mortgage although usually this can be paid of over a shorter period of time than the actual mortgage, but for first time buyers who need to make their homes a comfortable place to go back to after work, this cash incentive is too good to resist sometimes.
Lenders
Leeds Building Society last year launched a Variable Rate Cash back Mortgage paying as much as 3% in cash back. This would mean that a a £300,000 mortgage, that would be a cash back payment of £9,000. You get 3% cash back on completion. although the 3% Cash back must be repaid on early repayment of the mortgage during the first 3 Years. this mortgage is available to borrowers with a 20% deposit, and the product fee is £199.
The draw back of this mortgage package is that you may find yourself tied to one lender at their rate of interest for 6 years maybe or you may be charged a redemption penalty for moving your mortgage.
If you are thinking of investing in new home furnishings or need some home improvements then a Cash back Mortgage is for you.
Cash Back Mortgage are great for borrowers who are struggling to afford a new mortgage and feel comforted by the fact they will get cash back upon completion of the mortgage application, this stops any financial "hangover" and provides a little bit of breathing space for homeowners who may feel strangled by there new mortgage repayments or even to recoup there legal fees.
How much cash can I get back?
This figure depends on the size of the mortgage loan but it is usually no more than 3%.
Woolwich borrowers can get £200 cash back at a 2 year fixed rate at 2.99% with a 70% LTV, The minimum loan is £250,000, and the fees are £1,999. A term tracker which tracks the the base rate at +2.39% to 2.89% there is a £1,499 fee for £200 cash back with the normal 70% LTV
The Mortgage Works offer a 2 year fixed rate from 3.94% to 4.24% with a LTV between 75-80%, cash back from £350 - £500, the fees are typically 0.5 to2% of the loan, a 3 year fixed policy is also available at 4.24% with 70% LTV, borrowers can get £350 cash back with fees at 0.5% of loan. A 2 year tracker is available with a 75% LTV and fees of 2% of loan, with an interest rate of 2.94% the policy tracks BoE base rate +2.44%. Furness Building Society offer a similar package but with 80% LTV no fees and £250 cash back, but it has a higher interest rea at 3.29% (tracking the base rate at 2.79%, Santander's 2 year tracker has a more favourable interest rate at 2.67% with the base rate tracked at +2.17%, but for only £250 cash back there is a £995 fee and only 70% LTV. The term tracker from Santander tracks base rate at +2.99% with a 75% LTV, £1,250 Fee and £250 cash back. Alliance & Leicester's 2 year tracker is competitive with an interest rate of 2.29% tracking the base rate at +1.79%, 70%, fees of 2% of the loan with £200 cash back, although this is only available for remortgages.
Accord Mortgages are offering a 3 year fixed rate at 3.94% with a LTV of 75% for £250 cash back there is a £995 fee, Yorkshire Building Society have a package that's for first time buyers with a LTV of 85% you can get a 3 year fixed rate of 5.49% $500 cask back and NO fees but this is for first time buyers only.
5 year fixed rate - Cash Back
The Newcastle Building Society has a 5 year fixed rate at 4.35% with an LTV of 75% is one of the few 5 year deals, for £800 you can get £300 cash back, while all the figures range from £250 - £500 cash back which could be useful for first time buyers, it is well short of Leeds Building Society who are offering £1,000 cash back there are two deals with interest rates fixed at 5.69% to 5.73%, LTV's of 80-85%, the fees are £999 if the mortgage is under £500,000 mortgage, if it over that then its £199 plus 1% of loan.