Cash Back Remortgage - Remortgage, Secured, Buy To Let
The main advantage of this type of re-mortgage is that you are entitled to receive a lump sum up front as well as the agreed re-mortgage amount.
These re-mortgages are usually available within the lenders standard variable rate (SVR) product. However, some lenders also offer the cashback facility on tracker rates.
The amount of cashback differs depending on which lender you select. Most lenders typically offer the ability to borrow a minimum of 5% of the re-mortgage amount as a cashback option. So, for example if you were to borrow £100,000.00 mortgage, you would receive a lump sum payment of £5,000.00 as cashback upon completion. However, always check the terms and conditions as some lenders will limit the amount of cash back that they will pay out.
The obvious benefit of a cash back remortgage is that the cash lump sum can be used by you in any way you please. For home improvements, new furniture, a new car or maybe just to treat yourself. If you obtain a good remortgage deal from a new lender, then the cash back can often be a bonus, without necessarily placing yourself in a lesser financial position.
However, using a cashback re-mortgage does come with some cons. The interest rate that will be payable is usually the SVR, therefore, if the Bank of England base rate increases, the lenders SVR will also be subject to change in accordance with this. If the rate changes, your monthly mortgage payments will also change, which is something you should be aware of.
Also, as part of this product offers you cashback, the lender will want you to tie-in to the particular mortgage product. This means that they can impose penalties should you repay this mortgage earlier than the agreed tie-in period. They will charge you “Early Repayment Penalties” (ERP) which will usually run for a longer period than the standard ERP periods. The lender will also require that you repay the cashback amount should you redeem the current mortgage and switch mortgage provider earlier than the agreed period.
Re-mortgaging has become big business for lenders and now provides you with a very competitive market. This is beneficial to you as it mean the interest rates on these mortgages are also competitive. It’s worth checking with various lenders in order to get the best deal on offer. Most lenders have internet sites that can be checked to compare lender rates and it’s through the internet that you will also be able to apply to re-mortgage. Lenders remain open to branch and telephone applications, however the majority of lenders are now seeing increasing numbers of online applications. This not only saves them time and money but it’s also a convenient method for you too.
Along with the re-mortgage product itself, you can also purchase a mortgage protection policy. This works in much the same way as an insurance policy, for a monthly fee you will be entitled to have your monthly mortgage repayments made should you lose your job through not fault of your own or become ill. There are exclusions to this type of policy and all terms and conditions should be read fully before agreeing to purchase the policy.