Cash Back Mortgage
A certain type of mortgage allows borrowers to receive money back when they have closed a home loan. This is a cash back mortgage. These are the types of mortgage that are great for borrowers in need of a little extra cash during the mortgage process. Be sure to contact Super Brokers in order to take advantage of a cash back mortgage.
What is a Cash Back Mortgage?
This is the type of home loan that gives the borrower money back after their loan has been closed. It is also possible to obtain a cash back mortgage on either a refinance or a purchase loan. Worth noting is the fact that a cash back loan is received in the form of a lump sum.
A great thing about this type of loan is that there is no rule on what the money has to be used for, with the exception of the down payment. Most borrowers use this type of loan to help pay any fees that may come up during the home loan process as well as using it to mitigate the costs of either moving into or renovating a new home.
If you have been looking to make a move or a substantial aesthetic change to your existing home, a cash back mortgage is a great way to achieve that. This is especially true given how expensive those home renovations can be, depending on what you plan to do.
How much Does a Cash Back Loan Provide?
Generally speaking, a cash back mortgage will provide the borrower with up to 5% of the mortgage loan amount at the time of closing. So it should go without saying, the larger that your loan is, the more money that you can get back from this type of mortgage.
If you have a $100,000 mortgage, you would receive $5,000 back. If your mortgage is $300,000, you can get up to $15,000 back and so on.
When Does This Type of Mortgage Make Sense?
One great thing about a cash back loan is that the cash rebate that you receive is tax-free and can be used for just about any purpose. That provides a bit of flexibility for borrowers looking to make the best use of this kind of loan.
There are some general uses for this kind of mortgage. Paying for closing costs – things like land transfer tax and legal fees – can be mitigated or covered entirely by a cash back mortgage.
There is also the possibility to supplement personal income. This can be done during the first few months of home ownership or to pay for potential renovations or furniture purchases for the new home. You can even invest that money or put it into savings. Literally anything that you want to do.
Another great use for this type of mortgage that homebuyers are making use of is using it to pay down some high interest debt. A cash back mortgage helps to pay down potential credit card debt or maybe cut substantially into other debts.
How Does a Cash Back Mortgage Work?
Cash back mortgages can be available for a wide array of term lengths. This can be something like a 5 or 10 year mortgage and are available to all types of borrowers. They are even available to those taking advantage of a first-time homebuyer mortgage or perhaps a refinance mortgage for those looking to consolidate debt.
These kinds of mortgages are also fixed for the duration of the loan terms. This basically means that the borrower doesn’t have to worry about potentially fluctuating interest rates throughout the term of the loan.
Potential financing is available for both conventional and high-ratio home loans. Best of all, the repayment of the loan can be set for weekly, biweekly, semi-monthly, or monthly payments and it is also possible to make prepayments and lump sum installments without any costly extra fees.
It is also worth noting that, since there is money back up front, these kinds of loans tend to have higher interest rates than your standard mortgage. Keep this in mind when applying for a cash back mortgage; it is still part of the home loan and has to be paid back at some point.
How do I get one?
The first step is to contact Super Brokers to speak with a mortgage professional who can help you find a home loan that suits your needs. All applicants must be purchasing or refinancing property on Canadian soil. Keep in mind that the minimum down payment must be at least 5 percent and has a maximum amortization rate of 25 years. If the loan is for a refinance, only 80 percent of the home’s value may be accessed.