Most banks offer cashback or other incentives on their mortgages. Not all are worth signing up for

Skip to Content News Archives Economy Defence Energy Oil & Gas Renewables Electric Vehicles Mining Commodities Agriculture Real Estate Mortgages Mortgage Rates Finance Banking Insurance Fintech Cryptocurrency Defence Work Wealth Smart Money Wealth Management Investor Personal Finance Family Finance Retirement Taxes High Net Worth FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials More Innovation Information Technology FP500 Podcasts Small Business Lives Told Tails Told Shopping Financial Post Store Obituaries Place a Notice Advertising Advertising With Us Advertising Solutions Postmedia Ad Manager Sponsorship Requests Classifieds Place a Classifieds ad Working Profile Settings My Subscriptions My Offers Newsletters Customer Service FAQ News Economy Energy Mining Real Estate Finance Defence Work Wealth Investor FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials This advertisement has not loaded yet, but your article continues below.HomeReal EstateMortgagesMost banks offer cashback or other incentives on their mortgages. Not all are worth signing up forRobert McLister: A bank that hands you cash up front may be planning to take it back in the fine printAll of the Big Six banks are offering cash rebates on new mortgages to lure in your business. Photo by Wikimedia CommonsBanks want to pay you to borrow money.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountWe’re talking thousands of dollars in many cases, via cash rebates on new mortgages.Why? Because they’ve done the math and expect to earn it back.All of the Big Six banks are doing this to lure in your business.Here’s what’s currently on the table for someone taking out a $500,000 mortgage, subject to each offer’s conditions:This advertisement has not loaded yet, but your article continues below.BMO: $2,100CIBC: $2,000National Bank: $1,500Scotiabank: Up to $1,000TD Bank: $1,500RBC: $1,500SUBSCRIBER EXCLUSIVE: FP West: Energy Insider brings you behind the oilpatch’s closed doors with exclusive insights from insiders every Wednesday morning.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of FP West: Energy Insider will soon be in your inbox.We encountered an issue signing you up. Please try againThese numbers are current as of Oct. 23, but offers can change, so confirm the amount and eligibility requirements with the bank.What to rememberIf you’re getting a mortgage through a mortgage broker, they often have access to the same deals, but not always.And if you’re going with a non-bank lender (e.g., a credit union), they frequently have cash-back sweeteners of their own, and sometimes patronage dividends (“member profit sharing”), too.Then come the extras — for example:National Bank tosses in an extra $1,000 on a $500,000 loan if the mortgage is for a first-time buyer making a default insured purchase with 30-year amortization.RBC tacks on an extra $500 for first-time buyers.RBC and Scotiabank offer Avion and Scene+ points as bonuses.Scotiabank pays up to $1,500 in eligible switch costs (most banks pay for switch costs, but most do not pay your existing lender’s discharge/assignment fee).RBC and TD Bank add $1,100 for folks who switch to them.TD offers another $500 if you add a home equity line of credit (HELOC). Banks always appreciate a relationship with more room for borrowing.This advertisement has not loaded yet, but your article continues below.Of course, banks don’t hand out money without strings attached, and some of these strings could moor a cruise ship:Virtually all lenders make you pay the mortgage from one of their bank accounts. That’s how they rope you in to sell you other products and generate account fees.Some make you open other accounts as well — a low-interest savings account, for example, in the hopes you’ll be dumb enough to park money there and earn below-market interest.Often the mortgage term must be three years or more.Some lenders, like BMO, require borrowers to stay with them for five years, even if their term is shorter — or else pay back a pro-rated portion of the cash received.Some lenders reserve their best offers for those who add a home equity line of credit (HELOC). They appreciate a relationship with room for more borrowing.If you break the mortgage early, you have to pay back some or all of the cash (usually a pro-rata amount).Some banks require direct deposits (e.g., from your employer, pension provider or the government) into the new account, as this encourages more banking activity and gives you more to untangle if you try to leave.Some offers apply only to new customers of the lender.Borrowers with existing accounts may or may not qualify, depending on the lender.Don’t count on the bonus to cover closing-day expenses without checking delivery — it may be two to five months at some (intentionally?) slow lenders.You must qualify for the mortgage — obviously.Non-prime borrowers are seldom offered cash back.This advertisement has not loaded yet.This advertisement has not loaded yet, but your article continues below.Endless promo renewalsLenders have been using this trick for ages. In fact, I checked old newspapers and found cash incentives dating back to at least the 1980s, back when rates were much higher and so was the hair.What’s different today is that these offers are everywhere.The truth is that banks have trapped themselves. A bank that stops offering incentives risks watching shoppers follow the cash across the street.If a heavyweight like RBC stopped paying cash back, perhaps others would follow, but that’s far from guaranteed.One group of lenders that doesn’t offer cash back as much are mortgage finance companies (MFCs). These bank competitors, available mainly through brokers, rely heavily on thinner-margin insured loans. After paying the broker, there’s less room in the budget for a signing bonus.Conversely, MFCs sometimes offer a lower rate, particularly on insured mortgages.Their fixed-rate prepayment penalties can also be less punishing — worth remembering if life refuses to follow your five-year plan.Lenders also like to create false urgency by attaching expiry dates to their cash-back offers. Occasionally the offers do expire and disappear, only to come back later. But most of the time, the banks perma-extend these offers. (Either way, make sure you close your mortgage in the lender’s allotted time.)This advertisement has not loaded yet, but your article continues below.Finally, if you’re out shopping for a mortgage and come across two deals, a higher rate with cash back and a lower rate without, you need to compare them properly.To help with that, I whipped up this calculator. It estimates what rate you would need to be on par with someone who received cash back. Its conclusions aren’t universal, so run the numbers by a mortgage pro just to ensure they apply to you.Of course, rate and cash back comparisons are only one piece of the puzzle when picking a mortgage. A bank that hands you cash up front may be planning to take it back in the fine print. So compare contractual terms carefully before you cash the cheque.Robert McLister is a mortgage strategist, interest rate analyst and editor of MortgageLogic.news. You can follow him on X at @RobMcLister.For the best national insured and uninsured mortgage rates, updated daily, please visit our mortgage rate page here.This advertisement has not loaded yet.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.