Cashback Mortgages 101
The Cashback Mortgage
A Cashback Mortgage is a type of home loan where the lender offers the borrower a cash rebate after closing.
The amount of the cashback typically ranges from 1% to 5% of the mortgage amount, although it can be higher or lower depending on the lender and the terms of the loan.
Why Choose Cashback?
The main reason to choose a Cashback Mortgage is that it provides the borrower with extra cash that can be used for a variety of purposes, such as covering closing costs, making home improvements, or paying off other debts.
This can be especially beneficial for first-time homebuyers who may not have a lot of cash on hand.
The Downsides of Cashback
However, Cashback Mortgages often come with higher interest rates and fees compared to traditional mortgages, which means that the borrower may end up paying more over the life of the loan.
Additionally, the cashback rebate may be subject to certain conditions, such as a minimum mortgage term or restrictions on how it can be used.
Not for the Rate Shoppers
A Cashback Mortgage may not make sense for borrowers who are looking for the lowest possible interest rate or who plan to pay off their mortgage quickly.
In these cases, a traditional mortgage with a lower interest rate and no cashback rebate may be a better option.
Conclusions and Further Thoughts
Ultimately, the decision to choose a Cashback Mortgage should be based on a careful analysis of the borrower’s financial situation, long-term goals, and overall budget.
It is important to compare the costs and benefits of different mortgage options and to work with a reputable lender who can provide guidance and support throughout the home buying process. Call Huber Mortgage to find out more!
Sincerely,
Michael
PS – One of my hobbies is blogging about mortgages, debt and government policy. During the day I’m a MORTGAGE BROKER in Kelowna, BC!
Check out the Huber Mortgage Home Buyers Guide HERE
