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!