Cash Backs and/or Credits on Closing

Marci • October 13, 2013

This refers to those vendor incentives that may be included in the Offer to Purchase such as “ complete interior paint work prior to closing to the purchaser’s satisfaction.  If not completed prior to the closing date, the purchaser shall receive a $5,000 credit towards the purchase price on closing ”.

 

You might have heard of this as a great purchase strategy to try and maximize your borrowing against the value of property and reduce your down payment amount.

 

When the work is completed, this clause is fine but in most cases the work doesn’t get completed and you, the purchaser, are expecting a credit on closing.  These used to be perfectly acceptable by lenders but NOT any more unfortunately!   If this is written into the Purchase Agreement and the work is not completed, then the lender views this as a reduction in the property purchase price.  So if the original purchase price was $200,000 with a $5,000 credit, then as far as the lender is concerned if the work is not completed then the “adjusted purchase price” is now $195,000.      They will then only provide an approval based on say 80% of the “adjusted purchase price”.

 

So if you obtain a mortgage approval based on the actual purchase price, then it could all change just before closing to the new “adjusted purchase price”.    Why?  Well, just before closing, your real estate lawyer will send what we call an “interim report” or “statement of disbursements” to the lender.  If any reduction or “credit on closing” is mentioned in this report, it will be deemed to be a reduction in the purchase price.  This refers to any incentive or credit that the vendor is providing to the purchaser whether it is work completed or a “cash refund”.

 

The bottom-line is that if the work is not completed, and a credit on the purchase price is disclosed prior to funding, the lender will deem the value of the property to be less and subsequently reduce the purchase price and therefore the mortgage amount accordingly.  This involves completely re-doing and underwriting the deal and will delay closing.

 

My recommendation : Do not use this tactic on the Purchase Agreement or part of the closing process via your real estate lawyer unless you are prepared to have the purchase price and therefore mortgage amount reduced. If in doubt – get some expert advice from your Mortgage Broker or Realtor (or both)!!

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RRSP Home Buyers’ Plan Explained: A Smart Way to Buy Your First Home

By Marci Deane • July 22, 2026
Saving for a down payment is one of the biggest challenges first-time buyers face. What many don’t realize is that the Canadian government offers a program designed to make it easier—the Home Buyers’ Plan (HBP) . This program allows you to withdraw money from your RRSP to help purchase your first home, without immediate tax consequences. Here’s how it works: Who Qualifies? To be eligible, you generally need to be a first-time home buyer. In practical terms, this means you must not have owned a home in the past four years, nor lived in a property owned by your spouse or partner during that time. There are also special allowances if you’re living with a disability or helping a relative with a disability. In these cases, you can use the HBP even if you’ve owned a home more recently. How Much Can You Withdraw? Under the program, you can access up to $35,000 from your RRSP as an individual. Couples can combine their withdrawals for a total of $70,000 . These funds must have been in your RRSP for at least 90 days before you take them out. Paying It Back The HBP isn’t “free money”—it’s an interest-free loan from your own retirement savings. You’ll have 15 years to repay the full amount back into your RRSP, starting in the second year after withdrawal. Each year, the CRA will send you an HBP Statement of Account outlining how much needs to be repaid. If you don’t make your repayment in a given year, that amount will be added to your taxable income. Why It’s a Smart Strategy The HBP can give first-time buyers a powerful boost toward homeownership. It helps you put together a larger down payment, which can reduce your mortgage amount and monthly payments. Just remember: it’s important to balance the short-term benefit of homeownership with the long-term impact on your retirement savings. Next Steps Thinking about using the Home Buyers’ Plan? Let’s sit down and review whether it’s the right move for you. Together, we can create a strategy that gets you into your first home while keeping your future financial goals on track. 📞 Reach out anytime—it would be a pleasure to guide you through the process.

Bank of Canada Holds Rate at 2.25% — July 15, 2026

By Marci Deane • July 15, 2026
The Bank of Canada announced today that it is holding its target for the overnight rate at 2.25%, with the Bank Rate at 2.5% and the deposit rate at 2.20%. The tone of today's announcement is notably more optimistic than previous months. Here's what's changed and what it means for you.

Let’s Talk About Getting Top Dollar for Your Property

By Marci Deane • July 8, 2026
When it comes to selling your home, most people think the first call should be to a real estate agent. But the smartest first step often isn’t with your agent—it’s with an independent mortgage professional. Why? Because your mortgage plays a bigger role in your bottom line than most people realize. Planning to Buy After You Sell If selling means you’ll also be purchasing another property, you’ll want to know exactly where you stand financially before listing. Mortgage rules change regularly, and qualifying once doesn’t guarantee you’ll qualify again. Getting a pre-approval in place ensures you know what you can afford and eliminates surprises later. On top of that, reviewing the terms of your existing mortgage could uncover options you may not have considered. For example, porting your mortgage instead of arranging a brand-new one could save you thousands. Selling Without Buying Even if you aren’t planning to buy right away, there’s still an important step: understanding the cost of breaking your mortgage. Unless your mortgage is open, penalties apply—and they can be significant. By reviewing the numbers with a mortgage professional, you might find that simply adjusting your timeline could reduce or even avoid costly fees. Navigating Life Changes In situations like a marital breakdown, it can feel like selling the family home is the only path forward. But that’s not always the case. With the right guidance and a legal separation agreement, one spouse may be able to buy out the other, keeping the home and providing stability for everyone involved. The Bottom Line Selling your property is more than just putting a sign on the lawn—it’s about creating a financial plan that protects your equity and positions you for the best possible outcome. Before you take the leap, let’s sit down and review your options. 📞 If you’re ready to talk strategy and make sure you get top dollar for your property, I’d be happy to connect anytime.