Cash-back loans enable new homeowners to take care of additional expenses that may arise with the purchase of the home. You may find that you need to do some repairs in the home, buy furniture, and pay expenses like taxes or transfers fees amongst others.
The cash-back is usually a percentage of the principal mortgage amount and you get the amount when you make a down payment on the loan. You will pay back the loan at a higher interest rate than the standard mortgage interest rates. If you refinance or transfer the loan you will lose the benefit of the cash-back because the lender may decide to withdraw the offer.
What are the benefits of cash back loans?
The benefits we will highlight below may not necessarily apply to all lenders because the terms and conditions vary depending on the company you are getting the loan from. Some of these benefits include:-
No credit check
Cash-back loans use your bank and employee information to determine if you are creditworthy. As long as you demonstrate that you can pay the loans, you will qualify for the short term loan.
Easy application process
Cash-back loans do not take a long time to apply and some banks have the facility online. This means that in a few minutes you could get approval for the amount you wish to get.
Depending on where you apply for the loan from, the turnaround does not take a long time. Some turnaround times are so fast that within a few minutes you will know whether you have approval or not and can collect your money almost immediately.
Additional fees are clear.
There are some fees you need to consider when applying for a loan and the lenders are usually very clear on what they are. Make sure you have a clear understanding of what these fees are and what it will mean for the overall amount of money you’ll end up paying.
What do you need to consider?
Banks charge a higher interest rate on cash-back mortgage. If you can do without the loan, then you may be better off not applying for it. If however, you cannot do without it, just to be clear that you need to pay back a larger amount than you would on a standard mortgage.
Loss of collateral
Bad credit loans use collateral to secure the loan. This means that if you’re not able to pay, you will end up losing that collateral, whether it is a house, a car, or equipment.
Some people would question whether cash-back loans are safe to take. Just like a mortgage, cash backs have terms and conditions and you need to know what they are so that you do not get any nasty surprises somewhere along the line. You need to know that you will pay back higher interest rates and there are penalties that you may face if you do not adhere to the terms and conditions.