Buying a house or even renovating can be expensive; creating potential issues with money shortages, if unforeseen expenses arise. Specifically if you are a First Time Home Buyer, this mortgage strategy might be right for you.
Cash Back Mortgages
Simply put, a Cash Back Mortgage allows for a certain amount of the mortgage proceeds to be given back to you after closing. This still means that you have to show a “down payment” of the minimum being 5%… however it does mean that you can gain a portion of that back upon closing at the solicitor office. The money can be used for legal fees, moving expenses or possible renovations but with the new rules it can not be used towards down payment.
The amount offered in today’s market go as high as 5% and can go as low as 1%. With some lenders offering “specials” on 1.5% to 3% Cash Back product options. Qualifying for a Cash Back Mortgage will depend highly on credit score and the ability to debt service the mortgage at the higher interest rate. Keep in mind rates are Premiumed with this type of mortgage option; as well as the early pay out options change slightly with the Cash Back portions having to be “paid back” at different percentages, depending on when in the term you are wanting to break the mortgage.