Peace Of Mind Mortgage For First Time Buyers
When buying a house, it is often believed that paying for the property is the only expense the buyer has to bear. However, that’s far from the truth. To complete the purchase of a property, there are several other costs that you need to shoulder, like legal fees, transfer tax, and closing costs. In addition to this, homeownership entails other expenses like renovations, repairs, maintenance, etc.
After making your down payment and paying monthly expenses, it’s tough to come up with the cash for the expenses mentioned above. This can cause you to face problems like financial instability or poor housing conditions. To avoid these dilemmas, you can opt for a cash-back mortgage or a peace of mind mortgage.
The cash-back mortgage provides you with additional funds when buying your first home to cover the added expenses above your down payment. The cash-back you receive from the lender is beneficial to you if you are a first-time homebuyer with limited savings and even if you’re struggling to save for your down payment and closing costs. The additional money provided through this mortgage can also be used to replenish your savings, or for future home improvements. You can even use it to pay off outstanding debts like a car loan, which could potentially increase what you qualify for! The best part is that you receive all of these benefits at a very low-interest rate.
To take advantage of the cash-back mortgage benefit, only standard credit, income and down payment conditions apply. Simply speak to your mortgage broker in advance about requesting between 1% to 3% of your principal mortgage. All you need to do is satisfy the standard credit, income and down payment requirements just like any mortgage approval and you can receive up to 3% cash-back provided to you on the completion date.
The cash-back amount is not added into your mortgage, so you do not pay compounded interest to receive this benefit. However, if you break the term of your mortgage early before the five-year term expires, you may be required to pay a portion of the cash received back to the lender upon breaking the mortgage early.
In addition to the cash-back mortgage you also have alternate options like:
a. Using your own savings
There is always the option to use your own savings,. However, collecting sufficient savings for your down payment AND your closing costs, home improvement expenses, or whatever additional costs you have could take an extra six to twenty-four months, so often enough, it makes more sense for your timeline to consider whether cash-back could help you move forward right away.
b. Borrowing the funds from lines of credit, credit cards
In this case, you can borrow from unsecured lines of credit or credit cards. However, borrowing from lines of credit or credit cards is going to come at a much higher rate of interest, so be wary of this option as it could end up costing you in the long run.
To learn more about your mortgage options, reach out to Cody Rowe, a leading mortgage broker in Victoria, BC. I work for Canada’s largest national mortgage brokerage, Dominion Lending Centres, which gives me access to some of the best resources to fund your homeownership dreams. Besides this, I excel in assisting borrowers to create and implement long term strategies to acquire their real estate goals plus manage their financial situation with ease.