In this brief blog, we are going to talk about mortgage cashback offers, how a mortgage cashback offer may not be the best solution for you and what alternatives there are to mortgage cashback offers.

Table of Contents

What are Cashback mortgages?

Cashback mortgages are mortgages which provide mortgage cashback offers in the form of a large lump sum that you are paid upon completing on your mortgage or after you have made a couple of monthly mortgage repayments. If you are looking for a mortgage cashback offer you should compare the rates of all mortgage deals which offer mortgage cashback offers.

Cashback Mortgages will offer between £250 to £1000 or up to 1% of the balance of the mortgage (up to a certain limit).

A cashback mortgage may help a buyer cover costs such as stamp duty or conveyancing costs.

Terms for mortgage cashback offers

Some mortgage lenders, if not all will have specific terms which you have to meet before you can access the mortgage cashback offer. Some mortgage lenders may insist that you have a current account with them whilst others will have a minimum amount of time you must have had the mortgage before you can claim the mortgage cashback offer.

Mortgage cashback offers may also have early repayment charges attached to the mortgage.

You must ensure you read the terms and conditions to be sure you will be eligible for the mortgage cashback offer.  Your mortgage broker may be able to assist you in doing this to ensure you don’t miss out on the mortgage cashback offer.

Pros of mortgage cashback offers

Mortgage cashback offers allow you to have cash for suitable costs when buying a new home.

Cons of the mortgage cashback offers

Mortgage cashback offers will usually have high APR for their mortgages.

There may be high early repayment charges for the mortgages which makes it harder to remortgage.

Mortgage cashback offers may also have high mortgage application fees.

What does cashback on mortgage mean?

A cashback on a mortgage means when a lump sum is paid at the end of a mortgage application process.

Can you get cashback on a mortgage?

Yes, you can get cashback on a mortgage, there are a lot of mortgage cashback offers which are available in the UK mortgage market today but these offers usually come with higher than standard APRs which make the benefits of a mortgage cashback offer limited in nature.

In some cases, you could get a mortgage cashback offer which is offered as a percentage of what you pay your mortgage each year. This means a mortgage cashback offer could potentially save you hundreds of pounds each year.

Is a cashback mortgage a good idea?

Getting a cashback mortgage may be a good deal if other mortgages on offer do not offer you enough savings to outweigh the benefits of a cashback mortgage. The cashback received on a mortgage is usually tax-free but you should be aware as cashback mortgages usually have high APRs which are not competitive.

What is Natwest cashback mortgage?

A Natwest cashback mortgage is a mortgage product which Natwest offers that pays cashback. Natwest will pay your solicitor £250 cashback on the day you draw down your mortgage from Natwest. The Natwest cashback mortgage s only available on selected mortgages marked with ‘cashback’ and can be changed or withdrawn at any point by Natwest. The Natwest cashback mortgage may have an early repayment charge and has a maximum loan to value (LTV) of 85%.

How does mortgage cashback work?

Mortgage cashback works by providing you with a fixed sum on completion of your mortgage. In most cases, the mortgage cashback is just a refund on the interest charges which you have paid on your mortgage. Not all mortgage lenders will offer a cashback mortgage.

Which banks offer cashback mortgages?

Below is a list of banks and mortgage lenders that offer mortgage cashback offers in the UK:

Halifax Bank

Yorkshire building society

Natwest Bank

Lloyds bank

Santander Bank

Clydesdale Bank

The Co-operative bank

Lloyds Bank 2 year fixed cashback remortgage for people with an existing current account

Maximum LTV

80%

Maximum cashback

£200

Initial rate

1.59% fixed until 30 Nov 2021

Subsequent rate (SVR)

4.24% variable

Overall cost for comparison

3.8% APRC

Lloyds Bank 2 year fixed shared equity or shared ownership cashback remortgage for people with an existing current account

Maximum LTV

60%

Maximum cashback

£450

Initial rate

1.63% fixed until 30 Nov 2021

Subsequent rate (SVR)

4.24% variable

Overall cost for comparison

3.9% APRC

Lloyds Bank 2 year fixed shared equity or shared ownership cashback remortgage

Maximum LTV

60%

Maximum cashback

£250

Initial rate

1.63% fixed until 30 Nov 2021

Subsequent rate (SVR)

4.24% variable

Overall cost for comparison

3.9% APRC

Lloyds Bank 5 year fixed cashback remortgage for people with an existing current account

Maximum LTV

60%

Maximum cashback

£200

Initial rate

1.7% fixed until 30 Nov 2024

Subsequent rate (SVR)

4.24% variable

Overall cost for comparison

3.1% APRC

Lloyds Bank 2 year fixed shared equity or shared ownership cashback remortgage

Maximum LTV

75%

Maximum cashback

£250

Initial rate

1.71% fixed until 30 Nov 2021

Subsequent rate (SVR)

4.24% variable

Overall cost for comparison

3.9% APRC

Lloyds Bank 5 year fixed cashback remortgage for people with an existing current account

Maximum LTV

60%

Maximum cashback

£200

Initial rate

1.74% fixed until 30 Nov 2024

Subsequent rate (SVR)

4.24% variable

Overall cost for comparison

3.1% APRC

Halifax 2 year fixed cashback remortgage

Maximum LTV

85%

Maximum cashback

£750

Initial rate

1.76% fixed until 30 Nov 2021

Subsequent rate (SVR)

4.24% variable

Overall cost for comparison

3.9% APRC

Lloyds Bank 5 year fixed cashback remortgage for people with an existing current account

Maximum LTV

75%

Maximum cashback

£200

Initial rate

1.78% fixed until 30 Nov 2024

Subsequent rate (SVR)

4.24% variable

Overall cost for comparison

3.2% APRC

Clydesdale Bank 2 year fixed cashback mortgage

Maximum LTV

75%

Maximum cashback

£500

Initial rate

1.79% fixed until 30 Nov 2021

Subsequent rate (SVR)

5.2% variable

Overall cost for comparison

4.7% APRC

Yorkshire Bank 2 year fixed cashback mortgage

Maximum LTV

75%

Maximum cashback

£500

Initial rate

1.79% fixed until 30 Nov 2021

Subsequent rate (SVR)

5.2% variable

Overall cost for comparison

4.7% APRC

Lloyds Bank 2 year fixed cashback remortgage for people with an existing current account

Maximum LTV

90%

Maximum cashback

£200

Initial rate

1.79% fixed until 30 Nov 2021

Subsequent rate (SVR)

4.24% variable

Overall cost for comparison

3.9% APRC

Halifax 2 year fixed cashback remortgage

Maximum LTV

60%

Maximum cashback

£750

Initial rate

1.8% fixed until 30 Nov 2021

Subsequent rate (SVR)

4.24% variable

Overall cost for comparison

3.8% APRC

Lloyds Bank 5 year fixed cashback remortgage for people with an existing current account

Maximum LTV

75%

Maximum cashback

£200

Initial rate

1.82% fixed until 30 Nov 2024

Subsequent rate (SVR)

4.24% variable

Overall cost for comparison

3.1% APRC

Halifax 5 year fixed cashback remortgage

Maximum LTV

60%

Maximum cashback

£750

Initial rate

1.87% fixed until 30 Nov 2024

Subsequent rate (SVR)

4.24% variable

Overall cost for comparison

3.3% APRC

Lloyds Bank 2 year fixed shared equity or shared ownership cashback remortgage for people with an existing current account

Maximum LTV

85%

Maximum cashback

£450

Initial rate

1.88% fixed until 30 Nov 2021

Subsequent rate (SVR)

4.24% variable

Overall cost for comparison

3.9% APRC

Lloyds Bank 2 year fixed shared equity or shared ownership cashback remortgage

Maximum LTV

85%

Maximum cashback

£250

Initial rate

1.88% fixed until 30 Nov 2021

Subsequent rate (SVR)

4.24% variable

Overall cost for comparison

3.9% APRC

Lloyds Bank 2 year fixed cashback remortgage for people with an existing current account

Maximum LTV

90%

Maximum cashback

£200

Initial rate

1.88% fixed until 30 Nov 2021

Subsequent rate (SVR)

4.24% variable

Overall cost for comparison

3.8% APRC

Clydesdale Bank 2 year fixed cashback remortgage

Maximum LTV

75%

Maximum cashback

£500

Initial rate

1.89% fixed until 30 Nov 2021

Subsequent rate (SVR)

5.2% variable

Overall cost for comparison

4.6% APRC

Yorkshire Bank 2 year fixed cashback remortgage

Maximum LTV

75%

Maximum cashback

£500

Initial rate

1.89% fixed until 30 Nov 2021

Subsequent rate (SVR)

5.2% variable

Overall cost for comparison

4.6% APRC

Lloyds Bank 2 year fixed cashback remortgage for people with an existing current account

Maximum LTV

60%

Maximum cashback

£200

Initial rate

1.92% fixed until 30 Nov 2021

Subsequent rate (SVR)

4.24% variable

Overall cost for comparison

3.7% APRC

Halifax 2 year fixed cashback remortgage

Maximum LTV

75%

Maximum cashback

£750

Initial rate

1.93% fixed until 30 Nov 2021

Subsequent rate (SVR)

4.24% variable

Overall cost for comparison

3.8% APRC

Halifax 5 year fixed cashback remortgage

Maximum LTV

75%

Maximum cashback

£750

Initial rate

1.93% fixed until 30 Nov 2024

Subsequent rate (SVR)

4.24% variable

Overall cost for comparison

3.3% APRC

Lloyds Bank 2 year fixed cashback mortgage for first-time buyers with an existing current account

Maximum LTV

60%

Maximum cashback

£200

Initial rate

1.94% fixed until 30 Nov 2021

Subsequent rate (SVR)

4.24% variable

Overall cost for comparison

4.0% APRC

Lloyds Bank 2 year fixed cashback mortgage for people with an existing current account

Maximum LTV

60%

Maximum cashback

£200

Initial rate

1.94% fixed until 30 Nov 2021

Subsequent rate (SVR)

4.24% variable

Overall cost for comparison

3.9% APRC

Yorkshire Building Society 2 year fixed stepped cashback remortgage

Maximum LTV

75%

Maximum cashback

£300

Initial rate

1.95% fixed until 31 Dec 2021

Subsequent rate (SVR)

4.99% variable

Overall cost for comparison

4.1% APRC

Halifax 2 year fixed cashback remortgage

Maximum LTV

60%

Maximum cashback

£750

Initial rate

1.96% fixed until 30 Nov 2021

Subsequent rate (SVR)

4.24% variable

Overall cost for comparison

3.9% APRC

These figures above are accurate at the time of writing but as this isn’t a live table you should check that the mortgage cashback offers mentioned above are still in existence and seek independent financial advice when looking to get a mortgage.

Alternatives to Mortgage cashback offers

Cash is very essential when buying a home but you don’t necessarily need a mortgage cashback offer in order for you to access cash which may help you reduce the cost of buying your home. There are also government first-time buyer schemes which may be able to help you buy your home in the same way that the mortgage cashback offers allow you to reduce some of the costs which you may face when buying your home.

Some of the alternatives to mortgage cashback offers include:

Lifetime ISA- gives you a government bonus of £1,000 if you save the maximum £4,000 a year.

Help to buy ISA- gives a maximum bonus us £3,000 if you save the maximum allowed of £12,000. Before you get either you should consider which is better. Lifetime ISA vs Help to buy ISA.

Help to buy equity loan- gives you up to 40% as a 5-year interest-free equity loan. You begin to pay interest at 1.75 % after the fifth year and 1% plus RPI for every year thereafter.

Shared ownership- You can buy between 25% to 75% of the property initially with a shared ownership mortgage and then buy more using a staircasing mortgage.

Armed forces help to buy- similar to the help to buy equity loan but specific for the armed forces personnel giving them an increased chance of acceptance.

Rent to buy- This is the right to buy scheme on which this guide is currently discussing. A different marketing name is just used. Watch out for this when shopping to avoid missing out on eligible properties due to confusion.

Right to buy- allows you to buy your home at a discount price.

Preserved right to buy- same as above.

Right to acquire- same as above.

In this brief guide, we discussed Mortgage cashback offers. If you have any questions or comments please let us know below.

John Bate

John has 22 years of experience in financial services. This spans across financial research, financial services (As a qualified mortgage broker and underwriter), financial trading and sales at global investment banks. While working as a publishing research analyst, he covered European bank credit and advised institutional clients on investment strategies at both JP Morgan and Societe Generale. John has passed all three levels of the CFA (Chartered Financial Analyst) programme.