Category: Blogs,Mortgage Tips & Advice

CASH BACK MORTGAGES & CASHBACK REBATES

Let’s talk about Cashback Mortgages and Cashback Rebates, those are two different things.

Let’s dive into the nuts and bolts of cashback mortgages, focusing on how they work, their benefits, and their features. Then, we will look at cashback rebates.

What is a Cashback Mortgage?

A cashback mortgage is a type of mortgage where the lender gives the borrower a lump sum of cash upon closing. This amount is typically a percentage of the mortgage amount and can be used for various purposes such as covering, paying down debt, buying furniture, or making home improvements. The cashback can not be used for downpayment, but it can help you increase your buying power by paying off debt. For first-time home buyers, we have a program that ties in nicely with the cashback mortgage that can help increase your buying power and lower your tax bracket. Ask me about the “Shut the Front Door Program.”

How Do Cashback Mortgages Work?

When you secure a cashback mortgage, the process is similar to obtaining a traditional mortgage, with the added benefit of receiving cash back. The cashback amount usually ranges from 1% to 5% of the mortgage’s total value. For example, on a $300,000 mortgage, a 5% cashback would equate to $15,000 in cash to the borrower.

It’s important to note that cashback mortgages often come with a higher interest rate compared to traditional mortgages. The reason for this is that lenders need to offset the cost of providing the cashback.

Benefits of Cashback Mortgages

**Immediate Access to Cash:** The most apparent advantage is the immediate access to cash, which can be incredibly helpful for covering unforeseen expenses related to purchasing a new home.

**Flexibility:** Cashback provides flexibility in how you can use the funds. Whether it’s for home improvements, paying off debts, or simply keeping it as an emergency fund, the choice is yours.

Cashback Rebate Features

We have access to some lenders that offer a cashback rebate feature from time to time, which is essentially the cashback amount given to borrowers normally within 30 days of closing. There are some guidelines around these programs, but they are often very easily complied with. Keep in mind if you break the mortgage before the term is up, that cashback will be clawed back.

Final Thought 

While the increased interest rates are a trade-off, the benefits of immediate cash access and the flexibility it offers can make it a worthy consideration for many. As always, we need to review the details to understand if this product is right for you. Let’s connect if you want to learn more.

Click here to book a time to connect. 

Talk soon,

Ana

Mortgages can be complicated; we are here to help you make “cents” of it.

We focus on Mortgage Solutions, Period!

To learn more connect with Ana Cruz 905.870.0513 or email at ana@askanacruz.ca