“Are cash-back mortgages still available?

Recently a buyer client inquired on whether there are cash-back mortgages still available? The short answer is yes.

Clearly you want to invest as much of a deposit into your home as possible, with most new buyers investing 5% into their first home (if you invest 20% or more you save on mortgage insurance costs). However, for some of my clients who have a good credit rating, steady work and some savings for closing costs, they are finding that it is in their best interest to borrow a cash-back mortgage and get into the real estate market now at the low interest rates, versus waiting to save the 5% for a future purchase.

Following are two cash-back mortgage options available, there are several others as well. Please discuss the options that are most suited for your situation with your mortgage broker, if you need a great referral of one..... call me at 604-970-0393, Roland Kym

RBC is launching two default insured mortgage programs that have been modified slightly to meet RBC requirements:

·         CMHC Non-Traditional Source of Equity

·         Genworth Cashback Equity.

These two programs allow new home buyers who have above average credit scores and good cash flow but not enough funds for a down payment to use borrowed funds or Cash back to purchase a home.

Cash or borrowed funds can be used for down payment

Through these two programs and subject to mortgage default insurer approval, clients with good credit can use available Cash back or borrowed funds toward the 5% minimum down payment for a home purchase. Clients must also qualify under RBC standard credit criteria for both the mortgage and any loan included in debt servicing calculations.

Other key details of these programs:

·         Available only for home purchases

·         Property must be a owner occupied primary residence and all applicants must reside at the property

·         Cashback and funds borrowed for down payment cannot exceed 5% of purchase price

·         Loan can be a unsecured RBC Royal Credit Line or Term Loan, and can also be obtained from a competitor

·         Available to clients for one mortgage only

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