Cash Back Mortgage in Canada: How It Works and What It Costs

A cash back mortgage in Canada gives you a lump sum of cash — usually 1% to 7% of your mortgage amount — the same day your home purchase closes. In exchange, you accept a slightly higher rate for your term, so it's not free money, just money you pay back gradually.
I see this a lot: buyers who've just emptied their savings on a down payment, then get hit with closing costs or debt they want to roll together. Others have been turned down at the bank and just need someone to look past their credit score.

✓ Licensed mortgage agent

✓ 6 lenders compared side by side

✓ No cost, no obligation

Get My Free Cash Back Estimate Compare Lenders

ESTIMATED PAYABLE TO You, at closing

No. 2026-CB Illustrative only

CASH YOU RECEIVE

$29,000

Mortgage amount $580,000

Cash back % 5%

Approx. rate premium +0.85%

Est. extra interest (5yr) $22,678

Turn This Into a Real Offer

    
 
 
       Posted on Google  
   
   Alexandr Vydrin 
 
 
 
 Trustindex verifies that the original source of the review is Google. Glad to have experience working together! Faizal is knowledgeable and trusted advisor when it comes to getting the best terms for your mortgage financing needs. A+

Thank you
  
 
      Posted on Google  
   
   Renata Jovcevska 
 
 
 
 Trustindex verifies that the original source of the review is Google. We had a great experience working with Faizal as our mortgage broker. He was incredibly patient, knowledgeable, and took the time to walk us through every step of the process. He consistently checked in to make sure we were informed and comfortable with each decision. We truly appreciated his support and professionalism, and wouldn’t hesitate to work with him again. Highly recommend Faizal to anyone looking for a reliable and dedicated mortgage expert!
  
 
      Posted on Google  
   
   Jeffrey Chen 
 
 
 
 Trustindex verifies that the original source of the review is Google. After several attempts for 3 months, I was disappointed by 2 brokers, they just couldn't deliver what they had quoted. Then I came across Faizal Garasia, after giving him the detail conditions I was in, he gave me instant quotes, and helped me get the mortgage in 3 working days, and closed my condo purchase deal right at the deadline. Fantastic, very focus, great in time communication, unbeatable service attitude to my urgent needs. I highly recommend his service to anyone who truly looking for good service in applying the mortgage.
  
 
      Posted on Google  
   
   Sumaira Nosheen 
 
 
 
 Trustindex verifies that the original source of the review is Google. Our experience with Faizal team was Excellent. It sounds weird we contacted them first time through tik tok live.  Faizal & team very professional . With their help we were able to buy our first home. Once again thank you very much.
  
 
      Posted on Google  
   
   Janice Deocampo of RITE REALTY 
 
 
 
 Trustindex verifies that the original source of the review is Google. I had the great working time with Faizal and his team. Very professional and on point. Everything was fast, and mutual clients were happy with the result! Thank you!!
  
 
      Posted on Google  
   
   Barbara Sam 
 
 
 
 Trustindex verifies that the original source of the review is Google. This was the best experience of my life. keep up the good work you are the best. God Bless
Once again thanks.
Barbara Sam
  
 
      Posted on Google  
   
   Kristine May 
 
 
 
 Trustindex verifies that the original source of the review is Google. Faizal is very professional. He helped us in getting the right type of mortgage for our investment property. Thank you Faizal and your team for all your help and we definitely recommend your service!
  
 
      Posted on Google  
   
   Juan Navarrete 
 
 
 
 Trustindex verifies that the original source of the review is Google. I recently had the pleasure of working with Mr. Faizal and his team as a mortgage broker. To cut a long story short, I had placed an offer on a property and was struggling to secure approval with my previous mortgage broker. The process was dragging on for several weeks, and I was on the verge of losing hope. I had already invested in inspections and other preliminary steps when I stumbled upon an ad for Faizal's services.

Despite it being late on a Friday evening (9:30 pm to be precise), I decided to reach out to him. To my surprise, he responded promptly at 8 am the following Saturday. We sat down for an hour to prepare the file, and his team finalized the details on the same day. By Monday, he had already submitted the file and had some preliminary responses for me. By Wednesday at 2 pm, he had secured a commitment letter from the lender and reviewed the details with my realtor.

Over the next two weeks, we worked diligently to remove all conditions and finalize everything for closing. Faizal was consistently available to answer questions, ready to call the lender for updates, and maintained excellent and timely communication. His efficiency was truly commendable.

It's worth noting that this was for a property in Alberta, while Faizal is based out of Ontario. Despite the geographical distance and the challenges it presented, he managed to get everything done as promised during our very first call. We were even able to benefit from being in the same timezone.

Without Faizal and his team, my purchase would not have been possible. If you're in need of a mortgage broker, I wholeheartedly recommend Faizal. His dedication, professionalism, and efficiency are unparalleled.
  
 
      Posted on Google  
   
   judith gonzales 
 
 
 
 Trustindex verifies that the original source of the review is Google. He can make it happen! We  have  engaged with his services so many times and have referred him to our friends and families.
  
 
      Posted on Google  
   
   Milind Gothoskar 
 
 
 
 Trustindex verifies that the original source of the review is Google. I had question on my residential mortgage and Faizal Garasia provided very educative information about the current market trends and I received a valuable advise on my current mortgage. I strongly recommend his services

Book a free mortgage consultation

Contact Info

Call or text

(416) 825-0142

Service area

Toronto & the GTA — virtual across Ontario & Canada

Availability

In-person & virtual meetings, 7 days a week

License

FSRA #10557 — Dominion Lending Centres

What is a cash back mortgage?

A cash back mortgage is a regular mortgage with one added feature: your lender pays you a percentage of the mortgage amount in cash, shortly after your purchase closes. It isn’t a discount or free money — it’s a loan feature you pay for over the term through a higher interest rate.

The cash typically lands in your account within days to a few weeks of closing, and you’re free to spend it however you want: closing costs, legal fees, moving expenses, furniture, renovations, or simply a cash buffer for your first few months as a homeowner. Most Canadian lenders offer cash back only on fixed-rate mortgages, within specific term lengths — usually three years or longer.

Not the same as a zero-down mortgage. Zero-down-payment mortgages no longer exist in Canada. You still need to bring a full down payment to close — the cash back is a separate payment on top of that, not a substitute for it.

How a cash back mortgage works

Cash back is calculated as a percentage of your mortgage amount — not your home’s purchase price. If you buy a $700,000 home with 20% down ($140,000), your mortgage amount is $560,000. A 5% cash back offer on that mortgage pays you $28,000, not $35,000.

Step By Step

You apply and select a cash back option, typically 1%, 3%, 5%, or 7%.
Your rate is adjusted upward to reflect the cash back — the more you take, the higher your rate.
Your mortgage closes and the lender deposits the cash back into your account, usually within 5 days to 8 weeks depending on the lender.
You make regular payments at the higher rate for the rest of your term.
If you keep the mortgage to term-end, nothing further is owed. Break the term early and most lenders claw back some or all of the cash back.

Estimate your cash back

Adjust your mortgage amount and cash back percentage to see the payout — and roughly what it costs in extra interest over a 5-year term.

Cash Back Estimator

Illustrative — get your exact quote below

Mortgage amount $780,000

Cash back % 5%

CASH YOU RECEIVE

$39,000

APPROX. RATE PREMIUM

+0.85%

EST. EXTRA INTEREST (5YR)

$30,498

The real cost of cash back: what most people never see

The cash back offer is easy to understand. The cost is not — because it’s hidden inside your interest rate for the full term, not itemized as a fee. Here’s a worked example so the trade-off is concrete.

Mortgage Cash Back Example

Example: $500,000 mortgage, 5-year fixed term, 1% cash back

Scenario	Rate	Interest paid over 5 yrs	Net position
No cash back	3.50%	$81,200	—
1% cash back ($5,000 received)	4.00%	$93,100	–$6,900 net cost

In this example, the $5,000 cash back ends up costing roughly $11,900 in additional interest — a net loss of about $6,900 over five years. This is exactly why we run the full comparison for you instead of just showing the headline percentage.

Cash Back Callout

Cash back mortgage lenders compared

Cash back availability, maximums, and repayment terms vary significantly by lender. Here’s how the major Canadian banks stack up, based on publicly posted program terms.

Major Bank Cash Back Programs

Major bank cash back programs

Lender	Cash back range	Typical max	Rate type	Early break penalty
RBC	1%–7%	$20,000	Fixed or variable	Partial repayment
Scotiabank	1%–5%	No stated cap	Fixed or variable	Full repayment
CIBC	Up to 1% (tiered)	$3,500	Fixed only	Full repayment
BMO / TD (promo offers)	Fixed dollar bonus	~$4,100	Fixed or variable	Pro-rated repayment
National Bank	Tiered by loan size	$3,000	Fixed only	Full repayment
Private & alternative lenders*	Negotiable, often 1%–5%	Case by case	Fixed or variable	Varies by contract

*Private and alternative lending terms are set per file — see below. Bank figures reflect publicly posted terms at time of writing and change frequently; we confirm current terms for you at quote time.

Pros and cons of a cash back mortgage

Cash Back Mortgage Pros and Cons

Pros

Immediate cash at closing, no restrictions on how you spend it
Usually far cheaper than a credit card or personal loan
Helps first-time buyers cover closing costs without draining savings
Creates a financial buffer for unexpected costs after moving in

Cons

Higher interest rate locked in for your entire term
Usually restricted to fixed-rate mortgages
Stricter qualification at some lenders
Must repay some or all of it if you break the mortgage early
Costs more in total interest than the cash back is worth, in most scenarios

Cash back mortgage alternatives

Before choosing cash back, it’s worth comparing it against other ways to access funds around a home purchase — we’ll walk through these with you on your call.

Cost of Borrowing by Option

Cost of borrowing by option

Option	Approx. cost of borrowing	Best for
RRSP Home Buyers' Plan	0% (repay to RRSP within 15 yrs)	Down payment top-up, not closing costs
Cash back mortgage	Embedded in rate (~0.15–0.25%/1%)	Closing costs, renovations, buffer funds
Readvanceable mortgage / HELOC	7%+	Ongoing, flexible access to equity
Unsecured personal loan	10%+	One-time need, no home equity available yet
Credit card	19.99%–24.99%	Short-term only, paid off within weeks

Is a cash back mortgage right for you?

Cash back tends to make sense in specific situations rather than as a default choice. Run through this checklist:

Cash Back Mortgage Criteria

You've calculated your closing costs and know you'll be short without extra funds
You'd otherwise cover the gap with a credit card, line of credit, or personal loan at a higher rate
You're comfortable committing to a fixed-rate mortgage for the term
You don't expect to break, refinance, or sell before your term ends
You've compared the total 5-year interest cost against the cash back amount, not just the headline percentage

Private Cash Back Options

Bank said no? We can often still get you cash back.

Bank cash back programs come with strict credit score, income, and documentation requirements. If you're self-employed, rebuilding credit, or carrying CRA debt, you may not qualify at a bank even with strong equity — but that doesn't mean cash back isn't available to you.

Flexible qualification — approvals based on equity and overall picture, not just credit score
Negotiated terms — cash back amount and structure set for your specific file
Faster closings — private lenders can often move in days, not weeks
Works alongside bank financing — useful as a second mortgage or bridge solution

Ask About Private Cash Back Options

Frequently Asked Questions

Cash Back Mortgage FAQs

Is a cash back mortgage a good idea?

It depends on your situation. It can help if you're short on funds for closing costs or renovations and would otherwise borrow at a higher rate elsewhere. It's usually not worth it if you could cover those costs from savings, since the extra interest you pay over the term typically exceeds the cash back amount.

How much cash back can I get on a mortgage in Canada?

Most lenders offer between 1% and 7% of your mortgage amount, with 5% being the most common figure advertised. Some banks cap the maximum dollar amount regardless of your mortgage size, so check the fine print rather than relying on the percentage alone.

Do you have to pay back cash back on a mortgage?

Not through separate payments — but you pay for it indirectly through a higher rate across your whole term. If you break your mortgage early or refinance, most lenders require repayment of some or all of the cash back received.

Can you get a cash back mortgage with a variable rate?

At most major banks, cash back is offered only on fixed-rate mortgages. Some private and alternative lenders offer more flexibility on rate type — ask us directly if a variable rate matters to you.

Is a cash back mortgage the same as a zero-down-payment mortgage?

No. Zero-down mortgages no longer exist in Canada. A cash back mortgage still requires a standard down payment; the cash back is paid separately after closing, on top of that down payment.

— GET IN TOUCH