Cash Back Mortgages

A cash back mortgage can provide extra funds at closing or shortly after your mortgage funds, depending on the lender and product.

This option may be helpful if you are buying a home, renewing your mortgage, switching lenders, or looking for extra cash to help with expenses after closing. Like any mortgage strategy, it is important to understand the costs, conditions, and whether the option truly makes sense for your situation.

Cash back mortgage options are not “free money.” In many cases, the interest rate may possibly be higher, lender conditions may apply, and some or all of the cash back may need to be repaid if the mortgage is paid out early, transferred, or changed during the term.

How Cash Back Mortgages Work

1. Mortgage Balance Based Cash Back

With this option, the lender provides a cash back amount based on the size of your mortgage. The amount can vary depending on the lender, term, and mortgage product.

For example, a 3% cash back option on a $400,000 mortgage could provide $12,000 cash back at closing.

* This may be helpful if you need funds for moving costs, legal fees, debt repayment, or a financial buffer after buying a home.

2. Mortgage and Banking Bundle Cash Back

Some lenders offer cash back when you set up additional banking products with them, such as a chequing account, mortgage payments from that account, or other qualifying products.

* These offers are usually smaller than mortgage balance based cash back options and may range from a few hundred dollars to a few thousand dollars, depending on the lender promotion.

Why Consider a Cash Back Mortgage?

A cash back mortgage may be worth exploring if:

• You have enough down payment saved but want a financial buffer after closing

• You need help covering moving costs, legal fees, or other homeownership expenses

• You used the RRSP Home Buyers’ Plan and want to preserve cash for closing costs

• You are consolidating or paying off debt as part of your overall mortgage strategy

• You were already planning to move your day-to-day banking and the lender’s offer fits your needs

Important Things to Know - Cash back mortgages can come with conditions.

1) There can be a claw back on the funds (pro-rated normally)

If you pay off, transfer, refinance, or make significant changes to your mortgage before the end of the term, some or all of the cash back may need to be repaid.

2) Cash back funds cannot be used as your down payment.

This is a common question, but current mortgage rules require the down payment to come from an acceptable source before cash back funds are received.

3) Cash Back can cost you more overall

A cash back mortgage can be helpful in the right situation, but it is not always the cheapest option. We will help you compare the full cost, including the interest rate, terms, repayment conditions, and whether the cash back benefit is worth it.

Want too see if a cash-back mortgage is a fit for your home and mortgage plans?