Cashback Mortgages

Everything you need to know about Cashback Mortgages and how to get the best deal

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Pete Mugleston

Author: Pete Mugleston

Mortgage Advisor, MD

Nathan Porter

Reviewer: Nathan Porter

Independent Mortgage Advisor

Updated: November 17, 2023

How we reviewed this article:

Our experts continuously monitor changes in the financial space and work closely with qualified mortgage advisors for factual verification.

August 18, 2022

It might sound too good to be true; a lender pays you cash to take out a mortgage with them. But that’s exactly how cashback mortgages work. However, besides this attractive upside, it’s important to understand all the other features of this type of finance too.

In this article, we’ll explain how cashback mortgages work, where you can get one, what you should consider before you apply, and where you can find the right advice.

What is a cashback mortgage?

With a cashback mortgage the lender will pay you a cash lump sum simply by taking one out. This is usually between £200 and £1,000 or is sometimes a percentage of the total amount you’re borrowing. You’ll get this cash either when your application is approved or after you make your first repayment.

Cashback mortgages are designed with first-time buyers in mind. Buying your first home is a very expensive time, and a cash lump sum can help you to cover some of the costs involved, such as buying furniture for example.

These mortgages usually have an introductory period of between two and five years. During this time, you probably won’t be able to make overpayments or may have to pay a fee if you want to do so.

If you want to move or remortgage during the introductory period, you may have to repay some or all of the upfront cash back and might also need to pay an exit fee. So, to avoid paying more than you received in cash, you should choose your mortgage carefully with the help of an experienced broker to guide you towards the right lender.

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Which lenders offer cashback mortgages?

Most mainstream lenders offer cashback mortgages. Here are a few examples of what’s currently* on offer from the high street:

Natwest

The NatWest cashback mortgage offers between £150 and £1,000 (decided on a case-by-case basis) to first-time buyers. You’ll receive your payment on the day your mortgage begins.

Nationwide

The Nationwide cashback mortgage offers £500 to first-time buyers. You’ll receive the cash within a month of the completion of your home purchase.

Santander

Santander does not currently offer a cashback mortgage. Previously, they have offered between £250 and £1,000 cashback, and these offers may return in the future.

RBS

The RBS cashback mortgage offers between £150 and £1,000 (decided on a case-by-case basis) to first-time buyers. You’ll receive the cash on the day your mortgage begins.

Lloyds

The Lloyds cashback mortgage offers £250 to current account customers. You must have a Club Lloyds account to be eligible. You’ll receive the payment once your purchase is completed.

* = all of the above offers may be subject to change at the discretion of the lender at any time.

How a broker can help you secure cashback from your mortgage

There’s a lot to think about before you apply for your cashback mortgage, so seeking guidance from someone with experience in this specific area of lending can be a shrewd move. A cashback mortgage specialist can help with:

Finding deals

A broker can quickly compare all the cashback mortgage deals that are currently on the market, whereas this would be a very time-consuming task to do yourself – and you wouldn’t necessarily find all of them.

Calculating costs

They can also easily calculate the long-term costs of the different mortgages available, so you can see whether it’s truly worth it to receive the cash upfront or not. You want to avoid paying much higher monthly repayments for years in exchange for a small cash payment now.

Offering advice

By seeking impartial advice from an expert, you can be sure that you end up with a mortgage that’s right for you. If taking out a cashback mortgage isn’t in your best interests, with more suitable options available, rest assured, they will tell you.

If you get in touch we’ll arrange for a broker with experience of these types of mortgages to contact you straight away for a free, no obligation chat.

Benefits of a cashback mortgage

The obvious advantage of a cashback mortgage is that you’ll receive a cash lump sum of up to £1,000. Your lender may also pay some of the costs involved with buying a home, such as survey fees or stamp duty.

However, there are also some drawbacks that you should carefully consider:

  • Cashback mortgages often have higher rates than other mortgages
  • There may be additional fees involved in the long term, which could cost you more than the cash you receive
  • It can be expensive to exit a cashback mortgage, which might prevent you from moving house or refinancing

Cashback when remortgaging

You don’t necessarily have to be moving to a new home to get a cashback mortgage, you can also get one by refinancing your current one. However, the same guidance applies that you should carefully consider whether it’s worth it in the long term.

Get matched with a broker who understands special mortgage features

If you have any questions about cashback mortgages or you’re not sure whether this product is right for you, it’s best to speak to an expert. We work with a number of brokers who specialise in cashback mortgages and would be happy to help.

If you’d like us to put you in touch with someone for a no-obligation chat, simply use our free broker-matching service. To get started, just call 0808 189 2301 or make an enquiry.

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About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for Online Mortgage Advisor of course!

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Pete Mugleston

Mortgage Advisor, MD

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