You have perhaps noticed certain advertisements at your local banks on cash back programs saying:

\” Get your mortgage and 5,000$ back \”

Generally, cash rebates vary between .50 % and 5% depending on the amount borrowed and each bank’s policies.

In the past, the cash back option was very interesting for those who had no downpayment.

Nowadays, you must have a minimum of 5% downpayment and this is required from the outset by the bank and may originate either from our own savings or a gift from a family member.

The cash back is normally given to you at the time of closing at the notary or a few days after.

Mortgages with cash back have several benefits.

Being a buyer, whether it’s your first or tenth property, cash back can help you with buyer’s expenses such as welcome tax, renovations, buying new appliances and furniture.

For those who have other outstanding liabilities with a high interest rate, paying them off with your cashback can increase you cash flow and lower your overall borrowing cost.

A cash back is accessible to owner occupied and rental properties as well as refinancing .

The major disadvantage of a cash back is the higher interest rates.

When you take out a regular mortgage, you would get the discount rate which is now at 3.39% .

If you need 5% cash back on top of that, you will get the posted rate, which is currently at 5.34%.

So this becomes an expensive option and is also harder to qualify for since you need to be able to qualify for the high interest payment on a mortgage.

In addition, it is important to know that the bank puts a “Claw Back \” clause which states that if ever you are to break your contract, and refinance, transfer or sell your house, the cash back must be repaid to the bank.

For some banks, it is the total sum of the cash back, for others it is an amount a pro rated amount calculated on the remaining term.

Another disadvantage is that the discount is not available for those who take a variable rate and save interest costs over the long run.

In general, the cash back option would be interesting for those who can benefit for the extra cash due to in order to to have an emergency reserve, to pay off some debts or fund house expenses.

It\’s all about what is the right solution for you depending on your financial position, goals and priorities.

Whether you are purchasing your primary residence, secondary home , investment property, or refinancing, I can find you the solution that will be the right One for You and bring you to fulfill your goals.

No matter what your situation is, newcomer to canada, non resident, poor credit bureau, unpaid municipal taxes or provincial and federal taxes, I can find you a solution that would put you on the right path and got you approved for financing you need.

Having been in the banking industry for over 10 years, I bring my expertise and passion for credit solutions to my clients and take great pride in bringing my clients to fulfill their goals.

Yelena Markus

www.yelenamarkus.ca

www.yelenamarkus.ca

Author Bio: www.yelenamarkus.ca

Category: Finances
Keywords: cash back mortgages