The Lender, as an incentive, will offer a lump sum of cash once the mortgage has been taken out.

The amount will vary from lender to lender and on the size of the mortgage.

The amounts can range from a flat fee e.g. £200 to a percentage of the loan eg. 3% of the loan.

Normally the cashback is offered as a package of benefits e.g. linked with a discount, but pure cashback products are not uncommon.

Mortgages offering a 5 or even 6% cashback can be found which would mean a borrower taking a £70,000 mortgage would receive £4,200 on completion (at 6%).

As you would expect lenders apply an Early Redemption Charge with cashback mortgages.

Typically a borrower will be locked-in for 5 to 7 years where a substantial cashback has been paid.

For more information about Cashback Mortgages, contact one of our independent advisers.