Cash-back mortgages were
brought about by the fact that some borrowers did not have
enough money to buy their property by way of deposits or just
the associated fees.
For one reason or another they
were unable to save up enough for the deposit or could
not cover the other costs associated with buying a
property and needed that little bit of help those
expenses.
As a result lenders saw an opportunity, offer a product
that gave these
borrowers some money to do the things they needed to do.
Out of this was born the cash back mortgage.
This was later offered to all manner of borrowers even
those people arranging a re-mortgage Lenders felt it was
good to offer cash back as an incentive to take out a
mortgage with them.
Some lenders have been known to offer as much as 10% of
the mortgage borrowed as a cash back.
It should be noted though, that all lenders will have
hefty redemption
penalties after they have given a borrower a cash back
as they do not want someone taking the cash back and
then re-mortgage the next day. This means that should
you take out a cash back mortgage with a lender expect
to be tied into them for a set period of time.
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borrowers some money to do the things they needed to do.