What is it?

With a cash-back mortgage your lender will provide you with a lump sum of cash at the start of the mortgage, or at an agreed point during the term. Your lump sum could be anything up to 5 - 10% of the amount you originally borrowed.

A cash-back mortgage can have a fixed, variable or capped interest rate. Lenders wanting to attract first time buyers may bundle a cash-back offer with a discounted rate.

What does it offer?

You'll get a cash lump sum back which you can use to help meet the costs of setting up home, finance renovations, or pay for your legal and survey expenses.

When is it worth considering?

A cash-back mortgage deal can appear attractive if you are a first time buyer on a tight budget facing a range of additional costs as you set up your first home.

What should I be aware of?

Your lender is not giving you this money: one way or another you'll pay for it. You may be charged a higher rate of interest than you would with a straight discount deal, or there may be penalty charges which could tie you in to this mortgage for a longer period of time. You could also face a substantial period on your lender's standard variable rate.