Cash Back Program - yes you can buy a home without 5% downpayment

Are you trying to save to buy your new home? or are you just tired of paying rent? 

Do you have a good credit rating and do you have a full time job or steady income?

If you answered yes to both of the above you could be the perfect candidate for the Cash Back program offered by one of the top five banks.

Here is how it works. If you qualify to purchase a $300,000.00 property (example only - this amount depends on how much you qualify for based on income/debt ratio) you may borrow up to 95% of the purchase price and the Bank will give you 5% of the base mortgage amount as cash back on closing.

So it looks like this:

Purchase Price: $300,000.00

Mortgage Amount: $285,000.00 plus mortgage insurance premium 

Cash back on closing $14,250.00 (5% of base mortgage amount)

You will still need to pay your closing costs such as Property Transfer Tax (PTT), cost of conveyancing lawyer and tax adjustments. If you are a first time home buyer you will likely qualify for the first time home buyers exemption from PTT provided your purchase price is below $425K so your closing costs would be approximately $1,500.00  plus the balance of the deposit - in this case $750.00.

The mortgage would be at the "posted" rate for a 5 year term by the Bank - not at the "discounted" rate offered. At today’s interest rates the difference is approx. 1% higher (this is a give/take example and depends of the current rates offered) but don’t forget you are receiving the cash back, in this example $14,250.00.

NOW, factor in that property values will likely go up over the course of the next 3 years while you are waiting and saving.   In Greater Vancouver last year the property values went up an average of 10% - you can't save that fast.   It is also predicted that interest rates will go up by at least 2% over the next two years.

If the above holds true, and if history teaches us anything, it will - you will be paying more for the same property at a higher interest rate if you wait. If you buy now, you gain the equity in the property brought about by any increase in value and your mortgage is locked in for 5 years at a lower rate than it will be once interest rates increase as predicted.

It is a win, win situation and you own your own home sooner rather than later.

And by the way, you can buy almost any type of house with this program. New or existing houses, condos, townhouses, duplexes. This program is applicable on the purchase of your own residence only.

Please note - I am not a mortgage broker but the following information was provided to me by a mortgage broker.   Please call me and I will put you in touch for my information.