Rate

The rate you pay.

This is where the first warning bells about the big cashback mortgages can start to ring. If you want to get the money then you can’t normally sign up for any of the lender’s latest best-buy rates. Low cost discount mortgages or safety-first fixes are normally off limits as are the more modern tracker, flexible or current account mortgages – all of which you can read about on websites such as www.discountedmortgages.co.uk, www.currentaccountmortgages.co.uk and www.fixedratemortgages.co.uk.

With cashbacks you are normally charged your lender’s standard variable rate – likely to be up to 2 per cent a year more than its best-buy alternatives. On a £140,000 repayment mortgage an extra 2 per cent on your rate will add £171 a month to your payments. So the cashback may not look quite so generous after all. And as a variable rate you need to be ready to see your payments rise if interest rates go up. Worse still, lenders might increase these rates by more than any Bank of England rises if they want to boost their profits at customers’ expense. See how your payments will change at different interest rates by using the Calculators at www.thisismoney.co.uk.