Giving you extra money to spend after the purchase of a property, a cash back mortgage can be useful for offsetting closing costs, buying new appliances or furniture, and other expenses associated with buying a new home.

While a cash back mortgage might sound very tempting, it’s important to understand everything about them before applying for one, and a local mortgage broker can help you with this. However, to explain the basics of a cash back mortgage before you have a more detailed conversation with a professional, here are a few things you should probably know about them:

• Not every cash back mortgage is the same

If you’ve seen an advertising campaign from a bank or other such lender offering a cash back mortgage, you might feel like going ahead and signing up for one without even bothering to check whether you could get a better deal elsewhere. However, as with any type of loan, not shopping around for a mortgage isn’t recommended, and as cash back mortgages are typically offered by several major lenders, it can be helpful to shop around and search for the best terms and conditions.

• Don’t forget that a cash back mortgage is really just another loan

While getting cash back on your mortgage is an inviting prospect, it’s important to remember that when it comes down to basics, you’re really getting a loan on top of your mortgage. The interest rates of a cash back loan are calculated in such a way as to ensure that by the end of its term, you’ll have paid the lender back the cash they had given you, and in many instances, probably a bit more, too!

Cash back mortgages often come with higher interest rates, and be mindful of the fact that in some cases, the extra you must pay in interest, amounts to more than the you would have got back.

• Cash back mortgages typically operate on a 5-year term

Not every cash back mortgage will operate on a 5-year term, but the majority do, so you must think carefully about what could happen if you had to break the mortgage terms for any kind of emergency or unforeseen circumstance. Not only will you be required to pay a standard penalty if you do so, but you’ll also be asked to pay back a certain amount of the loan that you were given. This might not seem fair, but that’s the way it is.

To make sure you fully understand what you’re committing to with a cash back mortgage, and to protect you from losing money, talk to a local mortgage specialist. With access to all the lenders and their deals, they can guide you through the potential pitfalls and possible advantages of cash back mortgages with ease.