How a Cash Back mortgage works?
Cash Back Mortgage is for those who are looking to get a home loan with extra funds upfront. The way it works is the lender will charge you a little bit higher of an interest rate than you would receive with a regular mortgage product and once you close on your loan your lender will give you a cheque for the cash back amount. The cashback amount is included in your mortgage payment and you will contribute to paying you’re your cashback amount with every mortgage payment you make. The options are usually to take a 1%, 2%, 3% or 5% “cash back” on your mortgage. For example if you need a $200,000 mortgage and the lender gives you 3% cash back, then they will give you $6,000 upfront when closing.
Is a cash back mortgage a good idea?
Cashback mortgage is a great way to combine your high interest debt into your new mortgage. With the money you can use it for whatever you like you can pay off your high interest credit cards, use the money for renovations or cover your closing costs on your purchase. You get to take advantage of a low interest rate with a minimum increase in your monthly payment.
Who offers a cashback mortgage?
We have access to over 30 lenders that offer different types of cashback mortgages.
When is the cashback money paid to the client?
You will receive a cheque for the cashback money on the day of your house purchase closing. The lawyer will deposit the lum-sum of cash into your bank account when the transaction finalizes.
What if you pay off the cashback mortgage early?
If you pay the cashback mortgage before the 5 year fixed term is up you will have to pay back a portion of the cashback that has not yet been paid back to the lender through your interest rate.
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