{"id":219,"date":"2023-03-28T02:00:22","date_gmt":"2023-03-28T02:00:22","guid":{"rendered":"https:\/\/budgetrates.ca\/?post_type=service&p=219"},"modified":"2023-05-13T06:04:04","modified_gmt":"2023-05-13T06:04:04","slug":"cash-back-mortgages","status":"publish","type":"service","link":"https:\/\/budgetrates.ca\/fr\/service\/cash-back-mortgages\/","title":{"rendered":"Cash-back Mortgages"},"content":{"rendered":"
<\/div><\/div><\/div>
\n\t
\n\t\t
\n\t\t\t
\n\t\t\t\t

What is a cash-back mortgage?<\/h2><\/div>\n
\n\t
\n\t\t

Buying a home is a significant financial investment. Saving for a down payment can leave you short of funds for other home expenses like closing costs, improvements, furnishings, and landscaping. For this reason, a cash-back mortgage may be an option to consider.
\nYou can get up to 7% cash back on your down payment and closing fees with a cash-Back mortgage. This extra money can be very helpful for first-time buyers who need to purchase items like blinds, carpet, appliances, or even furniture to turn their house into their home.
\nCash-Back mortgages are quite popular in Canada, and it comes as no surprise that first-time buyers make up the bulk of customers.<\/p>\n\t<\/div>\n<\/div>\n\n\n\n\n\t\t\t<\/div> \n\t\t<\/div>\n\t<\/div> \n\n\t

\n\t\t
\n\t\t\t
\n\t\t\t\t
\n
\n
\n
\n \"\"\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n\t\t\t<\/div> \n\t\t<\/div>\n\t<\/div> \n<\/div><\/div>\n\t\t
<\/div><\/div><\/div>
\n\t
\n\t\t
\n\t\t\t
\n\t\t\t\t
<\/div> <\/div>
\n\t
\n\t\t
\n\t\t
\n\t\t\t

Who is a cash back mortgage for?<\/h2><\/div>
A cash back mortgage could be a viable option for you if:<\/p>\n
    \n
  • You want to borrow money to pay closing costs like transfer taxes or legal\u00a0fees.<\/li>\n
  • You are aware that the house needs significant upgrades or repairs.<\/li>\n
  • Your new home needs to be furnished.<\/li>\n
  • For the first several months after buying a property, you may need extra cash.<\/li>\n
  • You’ll need extra money to cover moving expenses.<\/li>\n
  • You have high-interest debt or student loans that you’d like to pay off.<\/li>\n
  • You wish to invest or increase your savings.<\/li>\n
  • You have a lot of debt with a high interest rate, and you want to pay it down.<\/li>\n
  • You’ve saved enough to buy a home, but you expect to be short on cash after the mortgage closes. The lump sum from the cash-back mortgage can help you get through your first few months as a homeowner.<\/li>\n
  • You withdrew funds from your RRSPs through the RRSP Home Buyers Program. Now you need additional money to cover post-purchase expenses.<\/li>\n
  • Your family members gave you money to go towards your down payment, but you might still need some more before you commit to this new financial obligation.<\/li>\n<\/ul>\n <\/div>\n\t\t<\/div> \n\t<\/div>\n\t<\/div> \n<\/div><\/div>
    <\/div> <\/div>
    \n\t
    \n\t\t
    \n\t\t
    \n\t\t\t

    How does a cash-back mortgage work?<\/h2><\/div>\n
    \n\t
    \n\t\t

    After your mortgage closes, the lender will give you a lump sum of cash if you choose a cash-back mortgage. Upon closing, a predetermined portion of the property’s value will be loaned to you as a rebate. Some lenders may offer anywhere from 1% to 7% cash back. The most typical amount given is 5% of the mortgage amount.
    \nIn other words, if you borrow $400,000 to finance your property with 5% cash back, your lender will give you an extra $20,000 (5% of $400,000). This would result in a total mortgage amount of $420,000. Although the funds are available for use anyway you like, they are primarily intended to assist buyers who are struggling to come up with the necessary 5% down payment (the minimum down payment needed to purchase a home with a conventional mortgage).
    \nIt is worth noting that only the initial $400,000 would be recorded as a mortgage.
    \nIt is vital to note that these funds are not considered borrowed. This amount is not even reflected in the principal of your mortgage. Instead, the bank will charge a higher fixed interest rate in order to recoup its initial investment. There is no cash-back option available with\u00a0variable rates.
    \nOver the life of your loan, the higher interest rate will more than make up for the extra cash you received up front.<\/p>\n\t<\/div>\n<\/div>\n\n\n\n\n\t\t<\/div> \n\t<\/div>\n\t<\/div> \n<\/div><\/div>

    <\/div> <\/div>
    \n\t
    \n\t\t
    \n\t\t
    \n\t\t\t
    \n
    \n
    \n
    \n \"\"\n <\/div>\n <\/div>\n <\/div>\n <\/div>

    What are the advantages?<\/h2><\/div>
    \n