Cash Back Mortgage

A cash back mortgage can be a great option for clients needing to create additional liquidity after purchasing a home. If the traditional minimum down payment of 5% plus the closing costs associated with your mortgage is leaving you with a lack of money left over for emergency funds, household furnishings, loan/debt pay down, etc., the cash back option may be for you. Cash back options are usually between 1-3% cash back. In return for the cash back, the lender will charge an inflated interest rate on the entire mortgage loan. The additional interest paid over the term of the mortgage is in most cases fairly comparable to the amount of cash back the lender provided upfront. It is important to note with a Cash Back mortgage that if you choose to sell your home, refinance, or payout your mortgage prior to the end of the term, not only may you have a standard pre-payment penalty, but will also have to pay back a proportionate amount of the cash back.