(Newswire.net — June 11, 2013) Surrey, BC — Some Canadians think that a Cash Back Mortgage is a great idea. On the surface, it all sounds good, but there must be a catch for this extra cash.
Kris Grasty is a Mortgage Broker for Dominion Lending Centre’s #1 office in Canada, Canadian Mortgage Experts. “Cash Back Mortgages should come with a Surgeon General’s warning similar to a pack of cigarettes,” Grasty says.
Though no longer available through most lender channels for the use of a down payment many lending institutions still push this product as a helpful solution. Lenders have the details within the fine print on their website relating to this product “…but the warning should be bigger!” Grasty continues. “Clients need to know that if they terminate the mortgage term prematurely, for ANY reason, they not only have an interest penalty to deal with. They also have to return the Cash Back portion to the lender.”
Grasty says that the lenders appear to be providing a great service allowing clients to do their renovations, or purchase appliances and furniture etc. Lenders also suggest using the cash back in order to pay down the principal, reducing the effective interest rate. “Why would someone want to borrow more money at a higher rate AND risk future mobility?” In Grasty’s recent blog on the matter: Cash Back Mortgage: Buyer Beware he points out that there are other methods of obtaining the desired cash.
“I am all about providing clients with options that allow them to accomplish their goals but more importantly, expose them to less risk and offer better flexibility. Anyone who has taken Driver’s training has likely learned to always leave yourself a way out. You should not treat your Mortgage any differently.”
There are other programs that licensed Mortgage Brokers are aware of and well versed in; Purchase Plus Improvement programs and Lines of Credit are two examples. “It can already be a tough pill to swallow if you have to pay an interest penalty when moving to a new home, but those that opt in to the Cash Back product are sometimes stuck! They are financially hamstrung from making a significant change in their lives or they take a major hit in equity to do so.”
Kris Grasty is a fully licensed Mortgage Broker with DLC Canadian Mortgage Experts and member of the Mortgage Broker Association of BC (MBABC).
Contact:
Kris Grasty
DLC Canadian Mortgage Experts
#501 – 17665 66A Ave Surrey BC V3S 2A7
(778) 878-7787
www.krisgrasty.ca
krisgrasty@gmail.com
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