Tip #8: Use a Cash-Back Mortgage

This is a very interesting type of mortgage for a number of reasons. Most people use this type of mortgage to help make the down payment for their initial purchase. Others will use this money to purchase new furniture for their new homes.

Some clients use this money to pay down the principle as soon as they close their deal. As a mortgage broker, I don’t usually recommend this method because it means accepting a mortgage at the posted interest rate. I will show you a way in the final chapter that will allow you to negotiate a very good rate and still get cash back. You can then apply this directly against the principle.

Cash Backs can be used to pay legal bills and other closing costs in tight budget situations. Many people forget to calculate these extra costs when purchasing real estate or when refinancing their mortgage.

The key fact here is that you can now negotiate from 4.00% to 6.00% of the total mortgage as cash back. On a $100,000.00 mortgage that can be as much as $6,000.00. Apply that towards your principle and you can save thousands of dollars in payments and interest.

As I stated earlier, cash backs have a purpose but should not be used unless absolutely necessary. When using a professional mortgage broker you can obtain discounted interest rates as well as cash back. This will leave you with cash in your pocket on closing, or you may use it to pay the principle balance of the mortgage.  This is ultimately the whole purpose of reading this site and FREE informational eBooks.

Daryl Marsden
P: 403-605-5711
daryl@maxmort.ca

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