Cash Back Mortgage 

This Just Happened > Cash Back Mortgage

Jack and Jill wanted to purchase a house, they had their eye on one…. the asking price was $400,000.  They went to their bank and the bank said they didn’t qualify as they had a car payment and the numbers didn’t work out.  The bank told the clients to come back after the car loan was paid in full.

By referral they came to me looking for advice.  When I looked at their file the car payment of $600 per month was a problem.  They still owed $9000 and this payment was not done for another 16 months.  To qualify for this mortgage Jack and Jill needed to pay this loan out.  They had savings for the down payment and legal costs, but not to pay out the loan.

What we decided to do was use a Cash Back Mortgage.  The interest rate was higher, which increased the mortgage payment by a little over $200 per month.  However the clients received 3% cash back form the lender, which worked out to $12,000.  Upon possession the car loan was paid in full and the clients received the balance of the cash back ($3000) to do with as they liked, in this case the clients set the money aside for a trip they had planned.  Plus the clients had more disposable income; with the car loan being paid they had $400 extra dollars to add to their budget. 

Cash Back Mortgages can be used to pay off debt or be used for closing costs at the time of purchasing a house.  It cannot be used for down payment.  Cash back amounts can be 1, 2 or 3% of the purchase price.  It’s a great option to help you or anyone you know get into home ownership.