1%-5% Cashback Available
Cashback mortgages are an excellent way to help pay for closing costs and, pay down debts that may be limiting your pre-approval amount. The cashback can even help transfer your existing mortgage while paying your mortgage penalties. In the case of a transfer, they can simultaneously pay out some credit card or other consumer debt. While cashback mortgages are at a higher interest rate they also help in having some extra money after closing for household items like appliances and furniture.
Although there are a few things to understand about cashback mortgages the rewards can outweigh the costs. Firstly, they work just like any other type of mortgage. Secondly, you will pay approximately .15%-.40% more on your interest rate for each 1% of cashback you receive. For example, if the lowest 5-year mortgage rate is 5.94% and you elect to receive 3% cashback. You can also expect to pay .45% – 1.20% higher on your mortgage rate. Finally, the cashback funds you receive can be used for whatever you like afterward.
Furthermore, when breaking a cashback mortgage, one must understand your existing mortgage penalty will be based on 3 months of interest or the interest rate differential (IRD). In addition to the penalty, you will also be required to pay back the cashback on a pro-rated schedule. Comparatively, a traditional mortgage would have this extra cost.
Earlier we mentioned that these cashback mortgages are more expensive than a traditional mortgage. While these types of cashback products aren’t for everyone, on the whole, they are excellent for clients who specifically need a little help qualifying for their dream home or have an existing mortgage and want to get a lower rate & pay their penalty off.
You can Contact us today for more information about how a cashback mortgage can work for you!