When shopping for a mortgage, you may come across lenders offering a cashback incentive to sweeten the deal. While it may seem like a great offer, it is essential to understand the terms and conditions attached to the cashback. In this article, IK Financial mortgage agents explain what mortgage cashback is, how it works, and what you should be aware of before taking it.
What is Mortgage Cashback?
Mortgage cashback is a form of incentive offered by some lenders to borrowers who take out a mortgage. The lender offers the borrower a cash lump sum upon completion of the mortgage. The amount of cashback can vary depending on the lender and the mortgage product. Instead of cash back some lenders could offer to cover Lawyer or Appraisal fees.
How Does Mortgage Cashback Work?
Mortgage cashback works by the lender offering a cash lump sum to the borrower upon completion of the mortgage. The borrower can use the cashback for whatever they want, such as paying for moving costs or buying new furniture for their home.
The amount of cashback offered can vary depending on the lender and the specific mortgage product. Typically, cashback is offered as either a fixed amount or as a percentage of the total mortgage amount.
The amount of cashback offered can vary depending on the lender and the specific mortgage product. Typically, cashback is offered as either a fixed amount or as a percentage of the total mortgage amount.
How Can You Benefit From Cashback?
Cashback offers come with numerous benefits that can make your mortgage more affordable and accessible, including:
- Maximum Flexibility: With a mortgage cashback, you have complete control over how to use the cash lump sum. Whether you want to pay for moving expenses or make upgrades to your new home, the choice is yours. This provides maximum flexibility and ensures that you get the most value out of your mortgage.
- Great Deals Available: With mortgage cashback offers, we carefully evaluate your goals and unique circumstances to determine if it is the right option for you. Depending on the lender and mortgage product, a cashback incentive can be a fantastic deal that saves you money and helps you achieve your homeownership dreams.
- Competition among Lenders: With the availability of mortgage cashback incentives, lenders are encouraged to compete, which ultimately benefits borrowers by providing more options and better deals. At IK Financial, we work with a wide variety of lenders to provide you with the best possible mortgage options.
What Should You Be Aware Of?
Before taking a mortgage cashback offer, there are a few things you should be aware of:
- Possible Higher Interest Rates - Some lenders may offer a cashback incentive but charge a higher interest rate. It is essential to compare the overall cost of the mortgage, including the interest rate and cashback incentive, to ensure it is still a good deal.
- Potential Early Repayment - Some lenders may require you to repay a prorated amount of the cashback incentive if you pay off your mortgage early. This means that if you decide to pay off your mortgage before the agreed-upon term, you may receive less of the cashback than originally offered.
Mortgage cashback can be an attractive incentive to take out a mortgage, but it's essential to read the terms and conditions carefully before accepting the offer. IK Financial works with a wide variety of lenders and home-financing products. Our experienced mortgage agents provide clients with information to make informed decisions aligned with their financial goals. While cashback incentives can help upfront costs, it is essential to compare the overall cost of the mortgage to determine if it is worth it. With IK Financial, you get the best mortgage product for your needs.
IK Financial Mortgage Team operates on behalf of Mortgage Edge. Lic#10680
