Cash Back Options

Cash-Back mortgages have for the most part gone by the wayside since the financial crisis of 2008, but before we write them off lets discuss if they were ever worth it.

Is A Cash-Back Mortgage Worth It?

With a Cash-Back mortgage from Butler Mortgage, the client receives a rebate on their mortgage loans at the time of closing of the mortgage. This rebate varies anywhere from 1% to 5% of the mortgage amount depending on the Bank and term chosen. The most common of the Cash-Back mortgages is the 5% Cash- Back featured by a few of the Canadian Chartered Banks.

The money from a Cash-Back mortgage is especially handy for the First-Time Home buyer who needs extra funds to purchase home improvement items such as blinds, carpet, appliances, or even furniture. Thus, first time buyers are the number one consumer of Cash-Back mortgages in Canada. A few banks allow the Cash-Back to be used towards the down payment.

It is important to remember that this rebate is never directly paid back to the Bank. Instead the Bank increases the interest rate on the entire mortgage to recoup their costs.

Why would I want a Cash-Back mortgage?

  • You have saved up enough money to purchase your home, but may be a little short after the mortgage closes. The Cash-Back acts as a buffer to get you through the first couple months as a new home owner.
  • You utilized the RRSP Home Buyers program and withdrew your down payment out of your RRSPs. Now you need money for legal fees and moving expenses.
  • You received a gift from your family to put towards your down payment but want some money in order to feel more comfortable taking on this new liability.