 Sam
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Joined: 21 May 2005
Posts: 286
Location: CALIFORNIA
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 Posted: Mon Jun 07, 2004 5:33 am Post subject: Cash Back Mortgage |
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Cash Back Mortgage is a kind of mortgage, in which a borrower is paid a set percentage of amount borrowed, as a cash payment on completion of the mortgage. These mortgages normally offer 1% to 12% of amount borrowed as cash back. There are two standard repayment methods for cash back mortgages. They are as following:
- Straight repayment method
- Interest only method
Advantages of cash back mortgage are as following:
- It pays lump sum to the borrower when the mortgage is taken out.
- It is suitable for the first time borrowers. It helps them to obtain a mortgage when they are unable to raise a deposit.
- It acts as an incentive to those borrowers who require the funds to pay professional fees, make home improvements, buy furniture, etc.
Disadvantages of cash back mortgage are as following:
- There is a lack of flexibility or competitiveness on the interest rate.
- A borrower has to pay extra fees such as cancellation penalties, administration cost, etc.
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