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Mortgage Broker News | 30 Aug 2011, 07:17 AM Agree 0
Growing optimism and a rebounding housing market are threatening to lift demand for cash-back mortgages in Alberta, cautions a leading Edmonton broker, asking his peers to guide clients to sounder alternatives -- and not only because of lingering economic uncertainty.
  • Hal Tagg | 30 Aug 2011, 05:05 AM Agree 0
    If you do the math on the 5% cash back product, it is almost the same as if a client borrowed the 5% from their credit cards at a rate of 19%. The net result is about the same. At the end of 5 years, a client would be just as well off if he used the 5% cash back program, or, if he borrowed the down payment at 19% interest with equal net monthly payments. I wouldn't say that we shouldn't use the cash back program. However, clients should be informed to know what they are doing. If they have the ability to borrow the 5% at a rate lower than 19%, then that is a better option for them.
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