Cashback mortgages

Wednesday, 05 April 2006 12:00

A cashback mortgage is a loan secured on a property which offers a cash rebate when the purchase is completed.

The money retuned to the borrower as cashback is normally either a percentage of the total loan or a fixed amount. It can be useful in covering part or all of the cost of moving house and setting up home.

However, the bonus sometimes has interest charged on it at a higher rate than the rest of the loan, and can include penalties if the loan is paid-off early. Additionally, a cashback mortgage may offer worse overall value than other mortgage options.

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