Cash Back Mortgages explained and available help from Shire Direct
The Cash Back Mortgage is one where the lender refunds a cash lump sum on completion of the purchase.
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Below, we explain and take a look at Cash Back Mortgages, along with their advantages and disadvantages, and provide information as to how we may be able to assist you if you are looking for a mortgage or remortgage.
Table of Contents:
What is a Cash Back Mortgage?
So, as we mentioned briefly during the introduction above, a Cash Back Mortgage is one whereby a Lender will refund a cash lump sum on completion of the purchase.
The cash back can generally be expressed in two ways.
- As a specified sum
For example £500 cash back on completion or £700 help with costs. - As a percentage of the mortgage loan
This can be a very attractive and enticing offer. For instance some lenders will offer a cash back of up to 10% of the mortgage loan, thus if the borrower arranges a mortgage of £150,000, the cashback on completion would, in this case, be £15,000.
What are the advantages of Cash Back Mortgages?
So what are the benefits of a Cash Back Mortgage? Well they can be very useful for first-time borrowers, as the cash rebate can be used to defray some of the attendant costs of purchase, such as stamp duty, costs and fees; as well as helping towards the costs of setting up a new home.
What are the disadvantages of a Cash Back Mortgage?
So you may well be asking, 'Are there any downsides or pitfalls to Cash Back Mortgages?'. Whilst in the appropriate circumstances the cash back mortgage can be a super incentive, caution should be exercised, and the borrower and advisor will need to explore the likely events of the short and medium term. This is because the lender will need to tie the borrower in to the mortgage product (known as the mortgage tie-in period) for a number of years often between 5 and 10 years! So Early Repayment Charges (ERC's) will often be heavy, and may require a refund of a portion or all of the cashback initially provided.
Cash Back Mortgages, a balanced view
Where the cash back is geared to a percentage of the loan, the operation of the account is usually tied to the lender's standard variable rate (SVR). However, cashback plans offering a smaller fixed rebate of cash, will often be part of a fixed rate or discount rate package, and can represent very good value for money, especially where the product has a good degree of flexibility!
I would like more information on Cashback Mortgages, can Shire Direct help?
We'd love to help! If you are thinking of applying for a mortgage or remortgage, and feel that a cash back mortgage might help in your circumstances, or you're interested in exploring the possibility of other mortgage types, we would of course be delighted to hear from you! Our qualified mortgage advisors are available seven days a week from 8am until 10pm on Freephone 08000 282 281, or why not contact us online anytime. We'd love to hear from you!
The overall cost for comparison is 9.8% APR.
The actual rate available will depend upon your circumstances. Ask for a personalised illustration. APR variable and based on a usual case. Most customers are likely to receive a lower rate or the same rate as our overall cost for comparison rate - learn more about APR.
There are no upfront broker fees.
However, a fee may be charged on successful completion. An indication is that on conforming cases (straightforward applications with no or minimal adverse credit) a fee may be charged of up to 1% of the amount advanced, typically £795 and will depend on your circumstances.
For non-conforming cases (where case research and processing may be more complex due to adverse credit or unusual circumstances), a fee may be charged of up to 3% of the amount advanced, typically £1,995.
THINK CAREFULLY BEFORE
SECURING OTHER DEBTS AGAINST YOUR HOME.
YOUR HOME MAY BE REPOSSESSED
IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
Adding existing debt to your mortgage will increase the repayment term and overall cost.
Are you worried and becoming stressed because you are having problems getting a mortgage or remortgage? Worry and stress no more! Here at Shire Direct we provide tailor made mortgage solutions to suit you, and can usually help with all kinds of circumstances including...
Remember, we're here to help, and would love to hear from you!
Shire Direct and Shire Direct Mortgages are trading styles of Shire Processing Centre Limited which is
Authorised and regulated by the Financial Services Authority in respect of regulated mortgage products and general insurances.
Registered No: 302389. Commercial funding and Secured Loans are not regulated by the FSA.
Licensed Credit Brokers. Consumer Credit Licence Number: 349999.
Shire Processing Centre Limited is registered under the provisions of the Data Protection Act by the Information Commissioners Office: Registration No: Z6795249. Registered in England & Wales. Company number: 2732202. Telephone calls may be recorded for training, monitoring and security purposes. All applicants must be aged 18-years or over.