Is a cash-back mortgage right for you?

Tracy Head • October 10, 2022

With rates rising and house prices dropping slowly, I’m finding some clients are having a tougher time qualifying right now.

I feel like I have been saying the same thing for different reasons over the last few years.


A significant number of the clients I work with live in northern B.C. I was chatting with a realtor in Fort St John this week and shared that the challenge finding financing for northern clients is slightly different (sweeping generalization here) than clients in the Okanagan.


I have not done statistical research, so I am speaking based on my experience with my clients in both areas, and my comments don’t apply to clients across the board in either area as there are always exceptions.


In northern B.C., in resource-based communities, I regularly see family incomes of $150,000 or more. In the Okanagan, I see family incomes more in the $75,000 to $90,000 range.


House prices are of course very different in various parts of the province. In Mackenzie, I have clients buying fully renovated family homes with large yards for under $200,000. In Smithers and Fort St John prices run between $400,000 and $500,000 for similar homes.


In the Okanagan. I’m noticing more of price drop but similar homes to what I’ve just described are still well over $700,000.

What evens the playing field is lifestyle choice.


In northern B.C., it’s rare for me to work on an application where the clients don’t own several “toys” (trailers, quads, boats, etc) which usually come with loan payments. Although some clients in the Okanagan also have those items, I find more of my applicants might have a vehicle payment and otherwise limited credit usage.


This week, I’m working with first-time buyers in northern B.C. I took their application and was pleased to see all of their toys but one were owned outright. They did, however, finance a brand-new, shiny pickup truck three months ago to the tune of $80,000, or $1,350 per month.


Then he was offered an amazing opportunity in a different community. They have been saving for a down payment, so have their down payment and closing costs taken care of.


They found a home they love but with the new truck payment and the quad payment their ratios are a little high.


For these clients, we will be working with a lender that offers a cash-back program. They will be getting three per cent of the mortgage balance as cash at the time of closing.That cash will be used to pay off their quad loan. Win-win.


As a rule, I am not a huge fan of cash-back mortgages.


There is one particular chartered bank that really promotes its cash-back option, but if the borrowers need to pay the mortgage out early for any reason (before their initial five-year term is up) they have to repay every single penny of the cash-back funds, regardless of how long they have been paying on the mortgage.


The lender I took these clients to also offers three per cent cash back, and if clients have to pay the mortgage off before the initial five-year term is up, they have to repay a portion of the cash-back funds, but on a sliding scale depending on how long they have had the mortgage.


The key takeaway here is if you are considering a cash-back mortgage program, it is important you understand the fine print. Life happens so a little time researching up front may save aggravation down the road.


For these particular clients the mortgage is the right fit.


If you are looking at applying for a mortgage in the near future, I suggest holding off on any purchases that require financing until you’ve had a chance to work with your mortgage person to see how a new loan payment might affect your borrowing power.

If you’d like to play with numbers to see what you qualify for, and how a potential loan payment might affect your borrowing power, feel free to download the link to My Mortgage Planner.


If you are able to hold off on a purchase until you are into your new home, you will likely find it easier to arrange mortgage financing.


Happy Thanksgiving.

Tracy Head

Mortgage Broker

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Conditions of Mortgage Financing

By Tracy Head • May 5, 2025
When I work with clients that say they are writing an offer on a private sale I always talk about the benefits of working with a realtor. Realtors do so much legwork that happens behind the scenes that clients aren’t even aware of. Most times it is challenging on my end when clients try to tackle the process of writing an offer on a private sale themselves. I joke and say I am going to charge them an extra fee because of the additional work it creates on our end. I don’t actually charge a fee to be clear but I am only half kidding. When you start down the road of buying a home there are many new and unfamiliar terms you may hear. Whether you are working with a realtor or not, arguably some of the most important things you need to learn about are the “subject to” conditions to include in your offer to purchase. When you write an offer to purchase a home, your realtor will offer guidance as to the conditions you include. Common conditions you will see are:  Subject to arranging suitable financing  Subject to a satisfactory home inspection  Subject to arranging home insurance  Subject to review of strata documents  Subject to the sale of your current home If you are purchasing a rural property or are in a unique situation you may also see:  Subject to a water potability test  Subject to an inspection of the septic system  Subject to the seller finding a suitable home to purchase These lists are not all-encompassing by any means. The purpose of adding conditions to your offer is to protect you in case there are any issues with the home you are looking to purchase. In previous columns I’ve written about the potential dangers of writing a subject-free offer. The high- level, quick position is that if you write a subject-free offer you’d better have cash on hand to buy the home. I have worked with several clients over the last few months that have written private offers. We do absolutely everything ahead of time to try to ensure they will be successful with their financing. These files stress clients more than you can imagine. They have to either find templates to fill out or pay a lawyer or notary to prepare the documents for them. Either way they need to quickly learn about the conditions I listed above and understand key dates involved in the buying process. The clients need to deal directly with the sellers on any issues that may arise. When you are working with a realtor they handle these issues on your behalf. A knowledgeable realtor also helps avoid issues by taking any of the personal contact and emotions out of any potential areas of conflict. Make sure you do your due diligence and have your ducks in a row as you move forward with an offer to purchase whether writing an offer with a realtor or on your own. Now that the sun has come out and the election is over I’ve seen my clients more actively shopping which is encouraging. As always, my advice is to work with a realtor that you are comfortable with and who knows your area well.

Not all lenders are created equal

By Tracy Head • April 21, 2025
Not all lenders are created equal Just as no two clients are the same, not all lenders are created equal. For the majority of clients getting the best interest rate is their primary concern. For me as a broker it is as important to find a lender that provides a smooth process from start to finish and excellent customer service once a mortgage has finalized. What do I mean by this? When new lenders pop into the mortgage market they often offer low interest rates or better compensation to encourage mortgage brokers to send files their way. Sometimes these new lenders are amazing, and sometimes not as much. Once in a while more established lenders will offer brilliant rates in order to increase the number of mortgages they have on the go. We see lenders float in and out of the competitive rate market based on how much money they have available to lend at any given time. While this can be great for clients, it can also be a nightmare. If a lender does offer rates much lower than other lenders they end up flooded with applications. They may or may not have the staff / staff with expertise to handle larger volumes and increased time pressures. If we are working on a refinance with flexible dates this isn’t necessarily a problem. If we are working on a purchase application with deadlines this can become stressful for all involved. On top of that lenders have different processes for handling the legal paperwork that goes to your lawyer’s office. Some lenders handle everything in-house and have very responsive teams to handle getting the documents to your lawyer and addressing any changes that need to be made. Other lenders hire third-party service providers to produce their documents and this adds an extra day or two to the process. As a broker I try to learn about my clients’ longer term plans and find the right fit lender-wise. I look at lenders’ policies for portability, pre-payment options, flexibility with respect to their guidelines, broker support, and equally as important client service experience after the mortgage finalizes. Does the lender have a portal? Will they allow me as a broker to help my clients or do they require clients to work with them directly for any changes? We sent applications to two newer lenders over the last month because they had fantastic rate specials available. Both files ended up being very stressful as we were down to the wire waiting for mortgage instructions to be sent to the clients’ respective lawyers. I prefer not to have to deal with last-minute stress on my files.  Rate is of course incredibly important to your long-term financial health. In my mind a smooth process before and after your purchase or refinance is also important. There are many considerations that go into choosing the right package for our clients. My recommendation one day may change the next depending on both your situation and what I am seeing behind the scenes with various lenders. I hope you had a beautiful Easter weekend!!