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| Insured ? | 80% LTV ? The rates in this column apply to mortgage amounts between 65.01% and 80% of the property value. The home must be owner-occupied and have an amortization of 25 years or less. You must have purchased it for less than $1 million. These rates are not available on refinances. Refinances require "Uninsured" rates. | 65% LTV ? The rates in this column apply to mortgage amounts that are 65% of the property value or less. The home must be owner-occupied and have an amortization of 25 years or less. You must have purchased it for less than $1 million. These rates are not available on refinances. Refinances require "Uninsured" rates. | Uninsured ? | Bank Rate ? | ||
|---|---|---|---|---|---|---|
Insured 5.04% | 80% LTV 4.5% | 65% LTV 4.5% | Uninsured 6.63% | 5.94% | ||
Insured 4.74% | 80% LTV 4.3% | 65% LTV 4.3% | Uninsured 5.92% | 5.54% | ||
Insured 4.14% | 80% LTV 4.14% | 65% LTV 4.14% | Uninsured 4.79% | 4.74% | ||
Insured 4.24% | 80% LTV 4.14% | 65% LTV 4.14% | Uninsured 4.54% | 4.64% | ||
Insured 3.99% | 80% LTV 3.99% | 65% LTV 3.99% | Uninsured 4.19% | 4.34% | ||
Insured 4.44% | 80% LTV 4.49% | 65% LTV 4.49% | Uninsured 5.9% | 5.06% | ||
Insured 5.09% | 80% LTV 5.29% | 65% LTV 5.29% | Uninsured 5.8% | 7.14% | ||
Insured 5.1% | 80% LTV 5.2% | 65% LTV 5.1% | Uninsured 5.1% | 7.35% | ||
Insured 4.8% | 80% LTV 5.05% | 65% LTV 4.85% | Uninsured 4.85% | 5.05% | ||
Insured N/A | 80% LTV N/A | 65% LTV N/A | Uninsured N/A | N/A | ||
Insured 5.25% | 80% LTV 5.25% | 65% LTV 5.25% | Uninsured 5.25% | N/A |
When you apply for a mortgage, you can ask for your bank for a cash advance. The money is tax-free and you can use it for whatever you want. This is what’s known as a cash back mortgage and the most commonly requested loan amount is 5% of the mortgage's value.
One of the most common uses of the cash advance is to cover closing costs like and transfer taxes and real estate lawyer fees. The cash is transferred to you when your mortgage is advanced (i.e., when you receive the funds).
Interested in applying for a cash back mortgage? LowestRates.ca can connect you with a mortgage broker who can shop the market for you and find the best cash back mortgage rates in Canada. Enter what type of mortgage you’re looking for and click ‘Get Started.’
Keep reading to learn more about cash back mortgages and whether one is right for you.
When you apply for a mortgage, you can ask your bank to provide a loan that’s larger than the value of the property you’re financing.
Not substantially larger, of course. The maximum cash back most lenders will grant is 7% of the mortgage. The most common cash back amount is 5% of the mortgage. A loan of 1% is the minimum you can apply for.
Your cash back is transferred to you at the same time you receive your mortgage (in other words, the money).
Like any loan, the cash is tax-free and can be used for whatever you want. Many homebuyers use it to cover costs that come with buying a property and moving, such as land transfer taxes, legal fees, hiring movers, or even buying furniture.
Your cash back is a lump sum you receive once your mortgage has been approved. The money is yours as long as you hold the mortgage to the end of its negotiated term.
Where can you get a cash back mortgage in Canada? Most A-lenders provide cash back mortgages. The term A-lender refers to Canada’s big banks. These institutions give preferential treatment to homebuyers that have strong credit scores and stable employment within an organization. Self-employed people, in many instances, can qualify for cash back mortgages from an A-lender if they are able to show an income history of two years or more and are still in business.
It may also be possible to get a cash back mortgage from a private lender, as private mortgages can be structured in any way.
LowestRates.ca can connect you to a broker who can help you find the best rates on cash back mortgages from an A-lender.
Cash back mortgages are typically sought out by people who are in the process of getting a new mortgage to cover moving costs.
But what if you already own a home and aren’t planning on moving soon, but need access to cash? You can still get a cash back mortgage by refinancing your existing mortgage. This is sometimes referred to as a cash-out refinance.
Refinancing your mortgage means that you’re paying off your current one with a new mortgage. To do this, you have to break the contract with your original lender (this is what it means to “break your mortgage”).
With a cash-out refinance, you can get up to 7% of your total mortgage advanced to you as soon as the mortgage closes.
One crucial difference is that you must have equity built up in order to qualify for cash back. Another thing to consider is that refinancing a mortgage can often be quite costly. Remember all those bank and lawyer fees you had to pay the first time around? You’re going to have to pay those again. Plus, refinancing and requesting cash on top of it means you will extend the life of your mortgage, so you’ll be in debt for longer.
Cash-out refinances can help pay for renovations or allow you to consolidate your debts. However, the cash back portion of your mortgage loan will have a higher interest rate than your mortgage. Refinancing also brings with it many fees. Add to that the fact that you are extending your mortgage, applying for a cash back mortgage could result in mounting debt.
Another option:
You don't necessarily have to do a refinance. Instead of refinancing, you can ask for cash back if you transfer your mortgage to another lender at the end of your mortgage term. A cashback transfer avoids the issue of not having enough equity in your property and you get the money you need. The new lender also covers the appraisal and legal fees in most instances.
There’s no right or wrong answer. Whether a cash back mortgage loan is a good idea for you will depend on your current financial situation and your long-term goals. If you’re thinking about applying for a cash back mortgage, here are some pros and cons you should consider before you start your search for the best cash back mortgage deals.
Pros of cash back mortgages
Cons of cash back mortgages
Begin an application with LowestRates.ca to speak with a broker or bank about whether a cash back mortgage is the best option for you and your goals.
No. The cash back is released once the mortgage closes. To be approved for a mortgage, you have to have at least a 5% down payment (20% if the property is valued at $1-million or more).
Your best bet for finding a deal on a cash back mortgage — keeping in mind that interest rates on cash back mortgages tend to be higher than the rate on your mortgage loan — is to do the following:
A mortgage broker can help you compare rates on cash back mortgages. A broker’s job is to show clients offers from many different lenders — unlike a dedicated bank agent, who can only advertise offers from their employer. LowestRates.ca’s online platform can’t compare rates on cash back loans. However, we can put you in touch with a mortgage broker who can help you shop the market and find the lowest cash back mortgage rate you qualify for.
Alexandra Bosanac
About the Author
Alexandra Bosanac is the Core Content Manager for LowestRates.ca. Her reporting has appeared in Canadian Business, the Toronto Star, the National Post, and the CBC.
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