Cashback mortgages are an excellent way to help pay for closing costs, pay down debts that are limiting your pre-approval amount and even help transfer your existing mortgage and pay large penalties.

There are a few things to understand about cashback mortgages.   They work just like any other time of mortgage.  You will pay approximately .15%-.35% more on your interest rate for each 1% of cashback you receive.   For example if the lowest 5 year mortgage rate is 1.89% and you elect to receive 3% cashback.  You can expect to pay .45% – .9% higher on your mortgage rate.

When breaking a cashback mortgage you need to understand you will have your existing mortgage penalty based on 3 months interest or the interest rate differential (IRD).  In addition to the penalty you will be required to payback the cashback on a pro-rated schedule.

While these types of cashback products aren’t for everyone, they are excellent for clients who 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.

Contact us today for more information about how a cashback mortgage can work for you!

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