Cash Back Mortgages
In the last couple of years the Federal Government has made changes to the rules regarding cash back mortgages. They can no longer be used as a down payment for the purchase of your home, but, they can be used as extra money to help with renovations, investments or travel for example. Cash back mortgages range from 1% to 5% of the mortgage amount.
What you need to know about Cash Back Mortgages:
Banks are not in the habit of giving money away. These mortgages come with higher interest rates and higher penalties if you choose to pay the mortgage out early. The cash back money can be seen as a loan that has it’s payment spread out over the term of the mortgage. If you pay it out early, you will have to pay the traditional payout penalty as well as a clawback on the cash back which is pro rated over the term of the mortgage. This can be a very pricey loan in the end.