Cash-Back Mortgage
A cash-back mortgage gives borrowers upfront cash when the mortgage begins, often used for closing costs or debt consolidation. In return, the mortgage typically carries a higher interest rate or longer commitment.
The cash is recovered by the lender through higher borrowing costs over time.
Why it matters:
Cash-back mortgages can help with short-term cash needs, but they often increase total interest paid. Understanding this trade-off helps borrowers decide if the benefit is worth the cost.
Related Mortgage Terms
Often confused with:
Interest Rate — A cash-back offer often comes with a higher rate that can cost more over time.
Closely related:
Closed Mortgage — Many cash-back products are closed and less flexible.
Mortgage Term — Term length affects how long you pay the higher rate.
Next step:
Closed Mortgage — Understand restrictions that often come with cash-back offers.