Cash Back and Cash Back Mortgages  

How do they Differ?

A “Cash Back” promotion is an offer of funds credited to you after your mortgage completes.  The funds are an incentive for borrowers to move lenders by offsetting the closing costs involved in transferring.  A Cash Back can in since cases impact the mortgage rate, but not always.  Terms can include paying the mortgage from an account held with that lender, or moving some portion of your regular banking to the institution.  Cash Back incentives can be of value and should be evaluated if offered.  

Cash Back mortgages operate like a loan added to the mortgage itself and rates are not always in the borrower’s favour.  Interest rates are higher for these mortgages.  Standard penalties apply if the mortgage is repaid before the end of the term, and a prorated amount of the cash back amount would be due at that point as well.    

Before signing for a Cash Back promotion, or a Cash Back mortgage, it’s best to ensure you understand all of the relevant terms attached with each.  Feel free to reach out to find out more, I’m here to help on any mortgage related questions you may have.  

Adapted From: 

https://dominionlending.ca/mortgage-tips/3-things-you-may-not-know-about-cash-back-mortgages