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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Bank of Canada Holds Rate at 2.25% — September 2, 2026

By Marci Deane • September 2, 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%. While Canada's economic recovery is broadening, a new layer of uncertainty has entered the picture. Here is what happened and what it means for your mortgage.

What Older Canadians Should Know About Mortgage Financing

By Marci Deane • August 26, 2026
Retirement doesn’t always mean a mortgage-free life anymore. And that’s okay. Between higher home prices, rising living costs, and longer life expectancy, many Canadians are choosing to retire with a mortgage or refinance later in life to create more flexibility. The goal isn’t perfection. It’s having options that actually support the life you want to live. If you’re thinking about how a mortgage fits into your retirement years, you’re not alone—and you’re not out of options. Why work with an independent mortgage professional? Because retirement financing is not one-size-fits-all. Unlike a single bank, an independent mortgage professional can look across multiple lenders and solutions to find what truly fits your income, equity, and long-term plans—not just what one institution offers. Mortgage options available in retirement Traditional Mortgage Solutions Many retirees still qualify for standard mortgages. Pension income, investment income, and other retirement sources can often be used to support an application. If you have good equity and solid credit, this is often the lowest-cost option. Reverse Mortgages For homeowners 55+, a reverse mortgage can unlock tax-free equity from your home with no monthly payments required. There’s no income verification or medical questions, making it a helpful option for those who want to improve cash flow while staying in their home. Home Equity Line of Credit (HELOC) A HELOC allows you to access your home equity as needed and only pay interest on what you use. Many retirees appreciate the flexibility and like consolidating income and expenses in one place. Private Financing Sometimes life throws a curveball. If timing, income, or credit create challenges, private financing can act as a short-term bridge. It’s not usually the first choice, but it can provide solutions when traditional lenders can’t. If you’re approaching retirement—or already there—and wondering how your mortgage fits into the picture, let’s talk. A clear plan can make retirement feel a lot more secure and a lot less stressful.

What Online Mortgage Calculators Can—and Can’t—Tell You

By Marci Deane • August 19, 2026
What Online Mortgage Calculators Can—and Can’t—Tell You Online mortgage calculators are everywhere—and on the surface, they seem like a no-brainer. You plug in some numbers, and out pops what you can “afford.” Simple, right? Not quite. While the math itself is correct, the story behind those numbers is often misleading. Mortgage qualification isn’t just about numbers—it’s about context, risk, and lender policy. And that’s where calculators fall short. The Numbers Are Accurate—but the Picture Isn’t An online calculator can show you what a payment might look like at a given interest rate, or how making extra payments could reduce your amortization. That’s useful information! But when it comes to mortgage qualification , calculators don’t account for the many variables that lenders consider, such as: Your credit history and score Employment type (salary, self-employed, contract) Outstanding debts and monthly obligations Assets, savings, and down payment source The property type and location you’re buying Lenders evaluate all these factors through their internal risk models. That means two people entering the exact same numbers into a calculator could receive very different results when they actually apply for a mortgage. Why Online Calculators Can Mislead You When you see a “How much can I afford?” or “Mortgage Qualification” calculator online, it’s easy to treat the result as fact. But these tools don’t know your financial story—they only crunch the data you enter. A calculator can’t predict how a lender views your risk, how new mortgage rules apply to your file, or how things like spousal support, car loans, or variable income will impact approval. In short: calculators estimate payments, not qualification . Use Calculators the Right Way Don’t get us wrong—online calculators still have value. Use them to explore different “what-if” scenarios: How do payments change with different down payment amounts? How would a rate increase affect affordability? What if you added $100 a month to your payments? These tools are great for helping you understand your comfort zone. Just remember: they’re a starting point, not a green light. The Real First Step: Get a Pre-Approval If you’re serious about buying a home, skip the guesswork and get a mortgage pre-approval . It’s quick, free, and gives you real-world clarity on what you can afford. A pre-approval looks at your full financial picture—income, credit, debts, assets—and provides a framework for your purchase price, payment range, and rate options. It’s the only way to get a reliable answer to the question, “What can I really afford?” Final Thoughts Online calculators are convenient, but they can’t replace expert advice. Think of them as a starting point, not a solution. A professional mortgage broker can interpret the numbers, navigate lender policies, and tailor your financing strategy to your actual situation. If you’d like help understanding your true buying power—or want to get pre-approved with confidence— reach out anytime . I’d be happy to walk you through your options and help you make sense of the numbers.