Cash Back Mortgage in Canada

WOWA Simply Know Your Options

A cash back mortgage allows you to receive tax-free money when your mortgage closes. Cash back mortgage lenders will typically offer cash back as a lump-sum of 1% to 7% of your mortgage amount or a set dollar amount. Homebuyers usually choose to get a cash back mortgage in case there are any unplanned expenses after buying the home.

However, other popular reasons people get a cash back mortgage are buying furniture, covering closing costs, and more. Although this sounds great, there's always a catch! Continue reading to become an expert in cash back mortgages in five minutes.

Best 5-Year Fixed Mortgage Rates in Canada

Select Mortgage Term:

1-Yr

2-Yr

3-Yr

4-Yr

5-Yr

Fixed

Variable

See More Rates

Cash back Mortgage Explained

Your cash back mortgage lender will deposit the lump-sum cash back into your account when the real estate transaction finalizes. There are various options for the cash back amount you can receive. Most homebuyers select a 5% cash back on their mortgage amount, but you can choose between 1% to 7%.

The cash back is calculated on your mortgage amount and not the total home purchase price. For example, if you buy an $800,000 home in Canada with a 20% down payment of $160,000, then your mortgage amount is $640,000. You would receive cash back on this amount. If you select 5% cash back on your $640,000 mortgage, you will receive $32,000 as cash back. You can refer to the table below to see the amount you'd receive at various mortgage sizes and cash back percentages. Lenders may have a maximum cash back limit.

After the mortgage has been finalized and cash back received, you'll need to make mortgage payments. Since cash back mortgages have higher interest rates, each mortgage payment will automatically contribute to paying off the cash back amount. You can use a mortgage interest calculator to see how much interest you'll pay over your mortgage term. If you break your mortgage early, you may need to pay back some or all of the cash back that you received. That’s because the lender won’t be able to make the cash back amount back from the higher interest rate if you leave early and stop paying interest. Check your lender's cash-back offer details to find out their conditions.

Best 5-Year Fixed Mortgage Rates in Canada

Select Mortgage Term:

1-Yr

2-Yr

3-Yr

4-Yr

5-Yr

Fixed

Variable

See More Rates

Cash back Mortgage Alternatives

A cash back mortgage is simply a type of mortgage in Canada. It is used if you need cash after buying a home or to finance closing costs. There are a few other mortgage alternatives.

• RRSP Home Buyers' Plan: This allows you to withdraw from your RRSP savings without any penalties. However, the money can only be used to contribute to your down payment. This option will free up some of your other savings for closing costs or buying furniture. The catch is that this money must be re-deposited into your RRSP within 15 years. We also have a guide on the RRSP Home Buyer's Plan to help you learn more.
• Readvanceable Mortgage: Combines your mortgage with a home equity line of credit. The HELOC allows you to withdraw money whenever you want, and you'll only be charged on the amount you use. You can learn more about this product through our readvanceable mortgage guide.
• Credit Card: This option charges the most interest, as demonstrated by the APR. However, your credit card balance is due 21 days after the statement. If you pay within 20 days, you will not be charged interest. If you are paid bi-weekly and responsible, you can pay off the balance with your next salary and not be charged interest. As a result, credit cards are best used as an interest-free payday advance. However, missing a payment or having too high a balance will affect your credit score. There are also some cash back credit cards that allow you to earn up to 5% back on your spending.
• Unsecured Loan: This type of loan is lent to you by a financial institution without requiring collateral. The APR is lower than a credit card but higher than a mortgage.

Where to Get a Cash back Mortgage

Cash back mortgages are a hot product, and lenders don't want to miss out on the action. As a result, you'll have no challenge finding a lender to provide you with the funding. However, it can get confusing to compare the different lenders. Although one may have a lower posted interest rate, there could be a catch. We've read through the fine print of each lender to help you understand which company is best for you.

RBC Cashback Mortgage

The mortgage can be fixed or variable-rate, and you can select a term of 1 to 10 years. RBCs cashback program will provide you with a maximum cashback of 7%, for a limit of $20,000.

Scotiabank Cash Back Mortgage

Scotiabank offers a cashback mortgage of up to 5%. The mortgage can be fixed or variable-rate, and you have the choice of a term for 3, 4, 5, 7 or 10 years. The catch is that if you break your mortgage early, you'll need to pay back the total cashback amount.

CIBC Wealth Builder Mortgage

The CIBC Wealth Builder Mortgage provides 1% cashback upfront and an additional distribution every three months. The mortgage must be closed with a fixed rate, meaning you can only pre-pay a specific amount each year. The term can be as low as 3 years and as high as 10. However, you must have a CIBC chequing and savings account to receive the cash. The cash you receive is fully repayable if you break your mortgage early.

Cash Back Mortgage Promotional Offers

While the following banks don't offer the traditional cash back mortgage, they have limited-time promotional offers. You won't be able to choose the cash back percentage, but these special offers are worth knowing.

CIBC Cash Back Mortgage

CIBC currently has a cash back offer in addition to the wealth builder mortgage. However, the two programs can't be combined. There's a three-step process; talking with an advisor, selecting the right mortgage, and finally receiving the cash back.

The mortgage must be at least $100,000 and have a minimum term of three years for a fixed-rate mortgage or 5 years for a variable-rate mortgage. You must be a first-time homebuyer or transfer your mortgage from another financial institution to qualify. You can't receive the cash back offer if you're an existing client who refinances.

The cash-back amount depends on your mortgage size and ranges from 0.5% to under 0.2%. If you are transferring your mortgage to CIBC from another financial institution, you can receive an additional $1,000 cash. You'll receive the funding within six to eight weeks after funding, and it must be deposited into a CIBC chequing account. If you break your mortgage term early, you'll need to pay back the entire cash back.

CIBC Cash Back	Mortgage Loan Size
$3,500	$1 million or more
$2,500	$750,000 to $999,999
$2,000	$500,000 to $749,999
$1,000	$300,000 to $499,999
$500	$100,000 to $299,999

BMO Mortgage Cash Back

BMO also currently has a promotional cash back offer. To be eligible, you must not have an existing mortgage with BMO and you must apply for a fixed or variable rate mortgage with a term longer than three years.

With a mortgage larger than $1,000,000, you can receive a maximum cash back of $4,100. The cash back amount decreases based on the size of your mortgage.

You'll receive the cash back within five business days of finalizing the mortgage. It will be deposited into your BMO chequing account, which is also how you'll need to make mortgage payments. If you break your mortgage, the penalty is pro-rated, meaning you won't need to pay the total cash back. The proportion to be paid back depends on how early you broke your mortgage term.

BMO Cash Back	Mortgage Loan Size
$4,100	$1 million or more
$3,100	$750,000 to $999,999
$2,100	$500,000 to $749,999
$1,100	$100,000 to $499,999

TD Mortgage Cash Back

TD Bank's special offer provides you with a maximum cash back of $4,100. Unlike the other programs, you can qualify as an existing customer by refinancing your mortgage.

The mortgage must have a minimum term of three years and a minimum principal of $100,000. The amount will be deposited into your account within 30 days of finalizing the mortgage. You must set up automatic payments through your TD chequing account to receive the cash back.

TD Cash Back	Mortgage Loan Size
$4,100	$1 million or more
$3,100	$750,000 to $999,999
$2,100	$500,000 to $749,999
$1,100	$300,000 to $499,999
$500	$100,000 to $299,999

National Bank Cash Back Mortgage

National Bank's offer provides you with a maximum cash back of $3,000 for mortgages larger than $750,000. As with the other programs, the cash back decreases with your mortgage size. The minimum cash back is $1,000 for mortgages between $100,000 and $250,000.

National Bank Cash Back	Mortgage Loan Size
$3,000	$750,000 or more
$2,500	$500,000 to $749,999
$1,500	$250,000 to $499,999
$1,000	$100,000 to $249,999