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What is a Cashback Mortgage?

Cashback Mortgage Advice in York

There are lots of different types of mortgages, and some of them will be more suited to you than others. This is because each of them are different and can benefit you in different ways.

Here we are looking at the cashback mortgage and how it works. Will it benefit you and how does it compare to other mortgage options?

First of all, if you would prefer to watch our cashback mortgage YouTube video, make sure to watch it below. We regularly post helpful mortgage guides and tips on our YouTube channel MoneymanTV. Make sure to subscribe if you enjoy our content!

What is a Cashback mortgage?

To put it simply, with a cashback mortgage, after you complete your term, you will get some money back.

The way that this is worked out is through a percentage of what you have borrowed. It’s usually something small like 1%-2%. In some cases, lenders will state a fixed amount in your mortgage contract.

Will a Cashback Mortgage benefit me?

Like all types of mortgages, Cashback Mortgages have both advantages and disadvantages. For example, you may be offered a free property valuation with your Cashback Mortgage, it all depends on your lender.

They are very popular amongst those looking to borrow lower mortgages. This is because you will get some money back along with some benefits on the side. If you get offered a competitive percentage on your Cashback Mortgage, it is definitely worth considering as an option. You may get a lot of money back upon the completion of your term.

The disadvantage to Cashback Mortgages is that they often come with high interest rates.

Different types of mortgages in York

Cashback Mortgages, although they sound great, aren’t at the forefront of the mortgage market. They were more popular in the early 2000s.

It’s not a mortgage option that should be shoved under the rug, however. We still find customers taking out Cashback Mortgages; it’s not like they’re a bad choice. Quite a lot of buyers choose them as their backup option.

If you want Specialist Mortgage Advice in York and want to speak with an expert, get in touch with our team. We have experience with lots of different types of mortgages and can help you find one that suits you the best. A mortgage advisor in York will be right by your side during the whole moving home process.

Yorkmoneyman Spring Budget 2021 Update

Rishi Sunak’s second Budget as Chancellor brought two pieces of welcome news for the property sector as the Government attempts to transform “Generation Rent” into “Generation Buy” to help stimulate the UK economy, namely the new 95% Mortgage Guarantee and an extension of the Stamp Duty Holiday.

95% Mortgage Guarantee

The name of this scheme is misleading as not everyone that applies is guaranteed to be offered a mortgage, it is still subject to affordability and credit score. The “guarantee” itself is that the Government will ensure Lenders don’t stand a loss if they grant a 95% mortgage to a customer who then subsequently falls into arrears and is repossessed leaving behind negative equity.

This scheme should in theory give Lenders more confidence to lend even though the applicant only has a smaller deposit to put down. Of course, Lenders never want to repossess someone’s home unless it is the last resort, but if that happens then the new scheme would cover any shortfall.

Lenders have been worried about the prospect of home values decreasing so this measure should alleviate that concern although of course, the chances of negative equity occurring will naturally reduce should property prices increase as a result of these announcements!

The scheme is available to both 1st Time Buyers and Home Movers, it’s available on any property (not just new build) and will run until December 2022. Some major High Street Banks have already signed up to the scheme and it’s likely more will follow later on. It’s still a big challenge for Lenders to cope with the demand they are getting for mortgages due to the difficulties training and supervising staff working from home but they will want to offer as many of these mortgages as they can.

Stamp Duty Holiday Extension

When the Stamp Duty Holiday was launched last year we all hoped life would be very much back to normal by the cut-off date of 31st March 2021 but things didn’t pan out that way as we know. Solicitors are struggling to keep up with the workload and if lots of chains had collapsed then it would have partly defeated the object of the exercise.

Therefore it was good to hear the scheme has been extended to 30th June for purchases up to £500,000 and 30th September for purchases up to £250,000.

The Government certainly sees the property sector as an area that can play a big part in our economic recovery and if you are looking to buy a home or remortgage this year please reach out and we will be happy to advise you.

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UK Moneyman Limited is authorised and regulated by the Financial Conduct Authority.
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© 2022 Yorkmoneyman

Yorkmoneyman, York Hub, Popeshead Court Offices, Peter Lane, York, YO1 8SU.

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