
Mortgage cashback is a type of incentive offered by lenders to attract new customers. It's essentially a refund of some or all of your mortgage fees.
You can receive mortgage cashback in various forms, including a lump sum payment or a reduction in your mortgage interest rate. For example, some lenders offer 1% cashback on the loan amount, while others provide a fixed amount per loan.
To qualify for mortgage cashback, you'll typically need to meet certain criteria, such as purchasing a new-build property or using the lender's recommended solicitor. Some lenders also require you to complete a specific course or training program.
Not all mortgage cashback deals are created equal, so it's essential to compare different offers and terms before making a decision.
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What is a Mortgage Cashback?
A mortgage cashback is a refund of some or all of the closing costs associated with a home loan, typically offered by lenders or mortgage brokers as an incentive to attract new customers.
This refund can be a percentage of the loan amount, usually ranging from 0.5% to 2.5%, depending on the lender and the loan terms.
In some cases, mortgage cashback can be used to cover the costs of inspections, appraisals, and other fees associated with the home buying process.
Mortgage cashback is not the same as a mortgage credit, which is a reduction in the interest rate of the loan.
Additional reading: Can You Get Cashback with a Capital One Credit Card
Types of Mortgage Cashback Offers
PTSB offers a 2% cashback deal on mortgages for first-time buyers, movers, and switchers, which can result in a €5,400 cashback upfront on a €270,000 mortgage.
Some of PTSB's lowest fixed rates don't come with any cashback, so it's essential to check which deals come with cashback and which don't.
The cashback on PTSB's mortgage repayments is paid monthly, and customers who make their mortgage repayments from the bank's Explore current account will receive 2% cashback on their monthly mortgage repayments every month until 2030.
This means that on a €270,000 mortgage, a customer can expect to receive €26.56 per month in cashback, which amounts to €319 per year.
PTSB's cashback deal is available for a specific period, until 2030, so customers should be aware of this when considering their mortgage options.
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How to Get a Mortgage Cashback
To get a mortgage cashback, start by finding the best cashback offer you qualify for, using comparison tables or asking your mortgage broker to source some deals.
You can apply for a cashback home loan online via the lender's website, which can take up to 20 minutes, or have a lending specialist discuss your application in detail.
Most lenders will ask you to verify your ID and sign relevant documents online, and you'll need to submit your financial paperwork, usually two current payslips, three months of bank statements, and a notice of assessment from the ATO.
If you're refinancing, you'll need to request a mortgage discharge form from your current lender to release the security backing the home loan.
The cashback will be paid into the transaction account linked to your new home loan within 30-60 days of settlement, depending on the lender.
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Understanding Mortgage Cashback
Mortgage cashback can range from £200 to £1000, or even a percentage of what you borrow back.
The amount you get is determined by the specific deal you choose. Some lenders may offer more cashback than others.
You'll usually get the money via your solicitor when the mortgage application completes. Alternatively, some lenders might pass it to you once you've made your first mortgage repayment.
Some lenders let you choose to take the cashback off your monthly repayments instead of as a lump sum.
Mortgage Cashback Comparison
If you're considering a cashback deal on your mortgage, it's essential to weigh the pros and cons. A cashback deal may seem appealing, but it's crucial to compare it to a lower rate refinance.
The interest rate on a cashback home loan may be higher than a lower rate refinance, as seen in the example where the cashback home loan has an interest rate of 6.25% compared to 6.00% for the lower rate refinance. This means you'll pay more in interest over time.
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The establishment and discharge fees for both options are the same, at $350 and $395 respectively. However, the cashback deal offers a $2,000 cashback incentive. To determine if this is a good deal, calculate how long it will take for the interest savings to cancel out the cashback. In the example, the lower rate refinance takes 10 months for the interest savings to cancel out the cashback.
Here's a comparison of the two options:
What Determines the Amount
So, you're wondering what determines the amount of cashback you'll receive on your mortgage. It all comes down to a few key factors.
The size of your deposit is a major factor - the lower the LVR (Loan Value Ratio), the higher the cashback. In other words, if you put down a bigger deposit, you'll qualify for a lower cashback.
The size of your loan is also important - banks like to lend as much as possible, and cashback rates can be used to win customers over. This means that larger loans often come with higher cashback offers.
Recommended read: Deposit Bond
Your affordability is another key consideration - the bank looks at your income and overall credit risk, and the lower the risk, the higher the cashback. If you have a stable income and a good credit history, you're more likely to qualify for a higher cashback.
How you repay your loan is also important - interest-only mortgages usually qualify for low cashback, while principal and interest mortgages have higher cashback offers. If you're planning to pay off your loan quickly, you may be able to qualify for a higher cashback.
Here's a breakdown of the factors that determine the amount of cashback:
- Size of deposit
- Size of loan
- Affordability
- Repayment type
This will help you understand how your mortgage agreement is structured and how cashback is calculated.
Lower Rate Refinance Comparison
Let's take a closer look at the numbers to see if refinancing with a cashback deal is really worth it. In this example, refinancing with a lower rate and no cashback results in a monthly repayment of $5,154. On the other hand, refinancing with a cashback deal and a higher rate results in a monthly repayment of $5,277, which is $123 more.
For more insights, see: Cash Out Refinancing News

A $2,000 cashback deal might seem like a great incentive, but it's essential to consider the interest rate. In this case, the interest rate for the cashback deal is 6.25%, compared to 6.00% for the lower rate deal. It's also worth noting that the establishment and discharge fees are the same for both options.
Here's a comparison of the two options:
It's clear that the cashback deal comes with a higher interest rate and slightly higher monthly repayments. However, it's also worth noting that the cashback deal would take 10 months for the interest savings to cancel out the cashback.
First Home Buyer Offers
As a first-time homebuyer, you're likely eager to find the best mortgage deal. Lenders often offer incentives to attract new customers, including mortgage cashbacks. These cashbacks can be a great way to save money on your home purchase. Some lenders offer a one-off mortgage cashback payment, which can be a significant amount.
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These cashbacks can be used towards various expenses related to your home purchase, such as legal fees, which some lenders will contribute to. This can be a huge help, especially for first-time buyers who may not have a lot of savings. You can also use the cashback to cover any early repayment break fees your current lender might charge.
Some lenders offer a discounted interest rate for the first six months or year, which can help you save money on your mortgage payments. This can be a great way to reduce your monthly expenses and make your mortgage more manageable. Additionally, some lenders offer reduced home and contents insurance premiums for a limited time, which can also help you save money.
Here are some common first home buyer offers from lenders:
- One-off mortgage cashback payment
- Contribution to legal fees
- Discounted interest rate for the first six months or year
- Reduced home and contents insurance premiums for a limited time
Pros and Cons of Mortgage Cashback
Mortgage cashback can be a useful perk, but it's essential to consider the pros and cons before making a decision.
A significant amount of money coming into your bank account is always going to be useful, even if you allocate it immediately to your mortgage balance.
However, it's not always a straightforward win. If you have a small mortgage and a small deposit, your cashback offer will be correspondingly small.
To make the most of cashback, you should also consider the interest rate. If it's slightly higher than the standard rate, you may end up paying more in the long run.
Here are some key things to keep in mind when evaluating mortgage cashback:
EBS
EBS offers a 3% cashback deal to first-time buyers, movers, and switchers who choose one of its longer-term fixed rates. This cashback is split into two parts: 2% upfront and 1% in five years' time.
EBS has no requirement for a current account to avail of this deal, making it a more accessible option for some.
You can get a maximum of €5,400 cashback upfront on a €270,000 mortgage with EBS.
EBS also has a separate €3,000 cashback deal for switchers who choose its green four-year fixed rate.
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Pros and Cons
A significant amount of money coming into your bank account is always going to be useful, even if you allocate it immediately to your mortgage balance. However, it's essential to consider the pros and cons of mortgage cashback before making a decision.
Mortgage cashback can be a great way to negotiate a lower interest rate, especially if you have a large deposit. For example, if you have a 40% deposit, you can negotiate a higher cashback rate with your lender.
However, it's not all good news. Mortgages offering cashback often have a slightly higher interest rate to recoup the costs of giving away free money. This means you may end up paying more in interest over the life of the loan.
You'll also need to consider the cashback repayment period. If you sell your home or repay the mortgage within this period, you may need to repay the cashback in full or a portion of it.
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Here are some key things to consider when evaluating a mortgage cashback offer:
- Interest rate: Is it competitive with other lenders?
- Cashback amount: How much is being offered, and is it a good deal?
- Eligibility: Are you eligible for the cashback, and are there any exclusions?
- Minimum term: How long are you 'bonded' to the lender, and what are the consequences of repaying the cashback early?
- Flexibility: Can you make overpayments, and are there any fees associated with it?
Approach with Caution
Approach cashback offers with caution, as they may lead to long-term repayment pain. This is especially true when considering the potential extra interest you'll pay over the lifetime of the loan.
A €300,000 house with a 90% loan-to-value (LTV) ratio and a 30-year repayment term is a common scenario.
Taking 2% cashback in the short term may cost you an extra €33,453 in interest over the lifetime of the loan, as seen in our example.
For another approach, see: Lifetime Equity Release
Frequently Asked Questions
Can you get cash back on a mortgage loan?
Eligible for cash back on a mortgage loan: Yes, but only on new loans or refinancing from another lender
Sources
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