Kanetix Forum

What is a cash-back mortgage? Can you please explain?

A cash-back mortgage is usually a fixed-rate mortgage that offers you up to 5 per cent in cash that goes back into your pocket once you¿ve been advanced your mortgage. You can use the money anyway you see fit. However, the money you are getting is not coming to you free of charge. Typically the interest rate for a cash-back mortgage is higher than the interest rate for regular, non cash-back, mortgage. As a result, you normally end up paying back the cash-back through the extra interest you¿re charged. Also, if you break your mortgage early you will incur a penalty in addition to having to pay back the portion of cash-back that you originally borrowed (called a claw back).

Paul Sidhu, Principal Mortgage Broker at KTX Financial Ltd.

Neither Kanetix® nor the KanetixForum.ca is a mortgage broker or agent. Although this information has been passed along to you from KTX Financial through the Forum, we are not responsible for the opinions expressed by them. Mortgages can be complicated. When reading these answers, keep in mind each person¿s situation is unique. Individual responses may vary depending on your lender, geographic location, and specific circumstances. If you have a similar situation, always speak with your mortgage provider, or a licensed mortgage representative, for terms and conditions that may apply to you.