Being offered cash-back is something that we may hear on a daily basis, but one place that it is unlikely to be heard is when purchasing a house. A lot more people are now opting to apply for cash-back when applying for a mortgage. This service in previous years was rarely offered and was pretty much unheard of, but it is becoming increasingly common place especially amongst those who are first time buyers. This cash-back service operates in a similar way that would be expected when buying groceries, but on a much bigger scale. The lender can provide you with a lump sum usually when the house is purchased and a mortgage has been set. For example if the mortgage was set for £100,000 and a 4% cash-back policy was agreed upon, it would be possible to gain £4,000 instantly. This service is a great idea and could really help first time buyers when money is usually going to be very tight.

However, whilst the idea of a cash-back service on a mortgage seems like a very good idea, (especially when the money can be used for anything), there are some catches. The mortgage provider will obviously want some sort of return on their loan and these may come in the form of hidden charges. The interest fees on mortgages with a cash-back option will more then likely be a lot higher when compared to mortgages that do not offer cash-back. Other charges that will need to be looked out for are arrangement fees, these arrangement fees could have a serious effect on how much money you receive, despite the fact that a set amount of money has been agreed upon.

So when considering a cash-back mortgage, some people may not be aware of these catches and may end up paying well over the odds.

However, if the person who requires cash-back is well informed of these issues, then gaining cash-back with a mortgage can be worthwhile. This is because despite some of the hidden costs that come with it, a large amount of money can still be gained at a time when it is most needed.