What does Cash back mean?

When deciding for cash back type of mortgage that means that the lender at the end of the term of your mortgage or even upfront, will actually restitute you an amount of money from your mortgage principal. For example, the terms of the mortgage might say that you will have cash back of 5% upfront if you agree to the deal. That means by borrowing an amount of £100,000 your cash back will be £5,000; and if you borrow £300,000 then your cash back will be £15,000 and you can observe quite a difference.

At a first glance the cash back mortgage is a very good solution to obtain cash in order to furnish your new home for example, and the greater the amount you borrow the higher the sum you receive. However, there are a few aspects one has to watch out for when deciding to contract a cash back mortgage. For example, the interest rates you will be paying may be tailored at a higher rate than usual, plus if you decide to repay your mortgage before the end of its term, your lender may require an early redemption fee from you.