A nice bonus when buying a house is mortgage cash back. Cashback is firmly in our lives in every way. You can receive it in the shop, on your credit card or as a coupon or a present. Usually, it is not much, but it is always nice to have some of your paid money back. But if we are talking about mortgage cash back the story is absolutely different.
It depends on your bank, the cost of the house, and a lot of other factors, but you can have approximately from 20.000 to 30.000$ in cash. We will look at what it is, how to get it, and what to expect.
What Mortgage Is
A mortgage is a loan, which you get from the bank to be repaid over a period of time. The bigger mortgage your bank gives you, the bigger amount of money you need to pay for it. To be more precise, the smaller the mortgage, the less money you have to pay each month. This sum can go from 300$ per month if it is a 30-year mortgage with low payments to the amount of about 1000 dollars if it is a big mortgage with small payments.
The difference between a mortgage or a credit card, for example, is that the mortgage has special conditions because it is used to buy a house (or a flat or an apartment). The interest and other fees are not that high, because we are talking about a really big amount of money, even 3% from, for example, 280.000$ is already enough to please the bank.
What Cash Back Is
Cashback is money that you get with your mortgage after you make any payment, small or big. It is not very much money if it is compared with the amount of the mortgage, but it can be very useful because it can pay for your traveling or food or anything else. And if you are looking for a mortgage, definitely take one with cashback.
Different Types of Mortgage Cash Back
There are many banks that give good mortgages and they offer four different options regarding cashback. Here you can see their comparison in the table. But it is still better to talk to your bank and ask whether there is a possibility to receive mortgage cash back, what are the conditions and what documents do you need.
| Name of a bank | Available Terms | Cash Back Rebate |
| Laurentian | 5-year fixed | 1-5% |
| ATB Financial | 5 or 7-year fixed | Up to 4% |
| Scotiabank | 3, 4, 5, 7, 10-year fixed | Up to 5% |
| CIBC | 3, 4, 5, 7, 10-year fixed | Up to 5% |
| RBC Royal Bank | 1 to 10-year fixed | 4-7% |
The interest-only mortgage is where you pay for all of the interest, but no extra payments. This is mainly suitable for people who want to own a house in the next five or ten years. The cashback that you get is the same amount that you paid for the interest-only mortgage.
The rate-based mortgage is when you pay extra money on your mortgage. In the beginning, this looks really great because you pay less each month, but after a few years, you will have to pay from 3000 to 6000 more. This type of mortgage is mostly used by people who want to own a house in the next one or two years.
A special equity mortgage is a great option for those who want to remortgage their house and get a better mortgage with a lower interest rate. But there are some conditions on this loan: it has to be at least 2 years old, you have to have an excellent credit rating, and no missed payments.
The normal equity mortgage is best for those who want some extra cash on their hands as soon as possible. There are no special conditions. They will give you cashback even if you pay just 10% of your mortgage. You can do it as much as you want because the interest rate can be lower or higher depending on how soon you want to receive the money.
Where Can I Use Mortgage Cash Back?
There are a lot of possibilities where to spend mortgage cashback. First of all, it is very good for traveling. If you have a long trip planned or something else that involves a few trips to somewhere far away, then you can use this money for that little extra that makes your travel more complete. Some people also use their cashback for food. It is not very much money, but it is enough to make you feel better or more comfortable.
Probably the most common use is to pay bills. This money gives you extra freedom and freedom of choice which is great. You can choose where your money goes and you can change your life with just a few dollars per month which is totally worth it!
A big advantage is that a cashback mortgage is tax-free and you can put it wherever you want, into savings, or new furniture. But there are some cons like if you decide to close your mortgage early some banks ask to return part of a cashback or even full amount. Plus, mortgages that can give you cash back usually have a bigger interest percentage.
Conclusion
Mortgage cashback is a nice bonus that you get when buying a house. If you are looking for a mortgage and you want to know just how much money you can get, do not hesitate and ask your bank. Generally, it is a very useful and helpful bonus and it makes living in a house more comfortable and easier.