Cash in hand

By THIS IS MONEY
Updated:

 

Is it possible to use the money received via a cashback mortgage as part of a deposit? TL, Barrow

James Cotton at mortgage broker London and Country replies: With a cashback mortgage, the lender pays a lump sum to the borrower (usually a percentage of the loan amount) once the property purchase has completed.

In theory, if you are able to exchange and complete simultaneously, then you could use the money from a cashback deal as part of the deposit, provided the money is received on the day of completion.

You would also need to get consent from the vendor’s solicitor, but it is highly unlikely that they would agree to complete without having received all the funds.

Furthermore, exchanging and completing on the same day is a risky game in itself, as it leaves no room for any errors or delays. If you are involved in a chain, then the potential for problems is greater still.

One solution is to increase your deposit using any funds you may be holding back to cover other costs such as home improvements, new furniture. Once you receive the cashback, you can use this to replenish your savings.

It is worth remembering though that cashback deals are generally not as good value as standard deals because of their higher rates.

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