Barclays, Halifax, Skipton Building Society and Clydesale and Yokrshore banks are among the providers all currently offering the bungs.
But mortgage fees and higher rates may not make the cash offer as generous as it first appears.
For example, Halifax is giving £1,000 cashback on a number of its mortgage, including its first-time buyer 1.63 per cent two-year fixed rate, available at a loan-to-value of 60 per cent.
However, the deal comes with a £790 fee, which cancels out all but £210 of the cashback.
It means borrowers need to look carefully at the overall cost of the mortgage, including repayments, fees and cashback to decide if it is good value.
For example, Skipton Building Society also offers £1,000 cashback – without product fees – on a 2.5 per cent fix at a loan-to-value of 85 per cent.
On a loan of £250,000 the deal would cost £25,928 over two years with monthly repayments of £1,222.
In comparison, HSBC currently offer a 1.39 per cent fix at the same 85 per cent LTV, with a booking fee of £999.
Even with the additional fee, a borrower would pay £24,687 over the two years with HSBC, less than with Skipton and with lower monthly payments of £987.
With more cashback deals on the market, borrowers have now been urged to check the overall cost of deals.
Charlotte Nelson, finance expert at Moneyfacts.co.uk, said: “With rates hitting the lowest on record and with nowhere else to go but up, mortgage providers are looking for other ways to attract borrowers – and cashback is just another weapon in their arsenal.
“This cashback war is highly targeted towards first-time buyers who have little cash to spare after paying their initial deposit, and it is an easy way for lenders to increase their lending to this more risky group.”
“As buying a home is often the most expensive purchase many will make, it is little wonder that borrowers are being enticed by offerings of cold hard cash of up to £2,500.
“However, borrowers need to bear in mind that any cashback may not be paid upfront, with many offers typically being paid after the mortgage deal is completed.”
“The idea of free money may sound appealing but borrowers must consider these deals with caution as they are often accompanied by a slightly higher rate or fee. Mortgage applicants would be wise look at the product in its entirety to ensure that the best deal is obtained.”