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5.5% Cashback mortgage… is this a good deal?

There are some interesting cashback mortgages available these days…. I’ve been asked if they are worth considering…

Let’s take a look at one of the better ones being offered out there…

The deal is simple.. you must take a posted 5 year fixed rate….currently at a very low 5.39%.  You get 5.50% back in cash.  Sounds pretty good but how does this compare with taking a discounted 5 year fixed rate of 3.69%?

We’ll use a $200,000 mortgage with a 25 year amortization in this example….


  • 5.5% cashback equals $11,000 in cash to you.
  • mortgage rate of 5.39% will give you a monthly payment of $1,208.01.
  • your mortgage balance after 5 years will be $178,080.91


  • interest rate would be 3.69%.
  • monthly payment is $1,018.70
  • your mortgage balance after 5 years will be $173,155.72.

And the end result is…..your monthly payments alone would almost balance out… there is a savings of $358.60 in favour of the discounted rate.   But look at the difference in the balance at the end of 5 years…. a $4,925.19 additional savings.

The obvious first choice is to take the discounted rate….but the Cashback is a good option for those that are just starting out or need funds for the initial expenses associated with buying a home….  The best choice for you will depend on your circumstances, goals and plans….. Talk to a qualified Mortgage Broker that doesn’t work for any one bank to understand the differences…

Steve Garganis View All

As an industry insider, Steve will share info that the BANKS don't want you to know. Steve has appeared on TV's Global Morning News, CBC's "Our Toronto" and The Real Life TV show. He's also been quoted in several newspapers such as the Globe and Mail, The Toronto Star, The Vancouver Sun, The Star Phoenix, etc.

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