Helping Clients Choose the Right Cashback Option for Their Mortgage Strategy

Cashflow and liquidity planning are a vital part of any comprehensive mortgage strategy. For many clients, access to additional funds can make a significant difference in both the short and long term. Two products that are often mistaken for one another are the cashback mortgage and the mortgage cashback offer. While both provide a lump sum of money, they differ in when the funds are paid, how they are delivered, and what they can be used for. For financial advisors, understanding these distinctions allows you to recommend the solution that best fits a client’s transaction timing, cash flow needs, and broader financial plan.

Cashback Mortgages Provide Immediate Funding When It Counts

Cashback mortgages provide a lump sum at the same time as the mortgage funds. The payment is included in the lender’s instructions to the real estate lawyer or notary, allowing the funds to be applied immediately toward approved expenses such as closing costs, renovations, or paying down existing debt as specified. Since the funds from the cashback mortgage are available at funding, this option can also help clients meet lender or insurer conditions to secure final approval. Receiving the payout at funding makes it especially useful for borrowers who need to cover specific obligations or ensure they meet qualification requirements before their mortgage closes.

Mortgage Cashback Offers Your Clients Flexibility to Use Funds After Closing

Mortgage cashbacks are special offers that come with more flexibility and work differently. The lump sum is paid after the mortgage funds, typically within a set number of days, and deposited into the client’s bank account. Since the payout is made post-closing, it cannot be used to improve debt servicing ratios or help with mortgage qualification. However, it offers post-closing flexibility for planned purchases such as furnishing the home, paying for moving services, completing cosmetic updates, or covering other discretionary expenses. A mortgage cashback offer is particularly beneficial for clients who have already met all pre-closing requirements but require additional funds for non-urgent needs after taking possession of the property.

For example, nesto’s Cashback Mortgage provides 1% of the mortgage amount, up to $13,750, for eligible new mortgages, renewals, or refinances. The funds are deposited within 7 to 14 days after funding and can be spent however the client chooses. This option offers a predictable, tier-free payout and is ideal for clients who value flexibility and want the certainty of knowing exactly how much they will receive. While it cannot help with qualification or pre-closing obligations, it can significantly enhance a client’s post-purchase experience by freeing up cash for projects or purchases that improve comfort, convenience, or property appeal.

Feature	Cashback Mortgage	Mortgage Cashback
When Funds Are Paid	At the same time as the mortgage funds	After the mortgage funds, usually within 7–14 days for nesto
How Funds Are Delivered	Included in the lender’s instructions to the real estate lawyer or notary	Deposited into the client’s mortgage payment account
Impact on Qualification	Can help meet lender or insurer conditions if used to pay down debts or cover specific costs at funding	Cannot be used to improve debt servicing ratios since payout is post-closing
Common Uses	Closing costs*, renovations, paying down debt, and meeting lender conditions	Furniture, moving services, cosmetic updates, discretionary spending
Flexibility of Use	May have lender restrictions on allowable uses	Full discretion for the client on how to spend funds
Eligibility	Product-specific, often for certain mortgage types and terms	New mortgages, renewals, or refinances meeting the lender’s eligibility rules
Example Amounts	Percentage of the mortgage amount, often with a maximum cap	nesto: 1% of the mortgage amount, up to $13,750
Interest Rate Impact	Typically higher than non-cashback mortgage rates	Cashback rate specific to a 5-year term with 120-day rate hold and may differ from the lowest posted rate
Early Payout Calculation	Based on the lender’s prepayment penalty calculation as per the mortgage terms and conditions	Based on nesto’s prepayment penalty calculation as per the mortgage terms and conditions.The cashback will be clawed back fully or proportionally if the mortgage is discharged prior to maturity.
Best For	Clients needing funds available on closing day to manage obligations or meet requirements	Clients wanting a predictable, no-tier lump sum for planned post-closing expenses

_{*Source of funds for closing costs must still be confirmed from the borrower(s) own resources as part of federal mortgage lending requirements.}

Matching the Right Option to the Client’s Financial Plan

If the priority is to have funds available on closing day to manage transaction costs, complete renovations immediately, or meet lender and insurer conditions, a cashback mortgage may be the stronger choice. If the main goal is to access a predictable lump sum for expenses after moving in, a mortgage cashback offer is likely more suitable. A skilled financial adviser can run a cost-savings benefit analysis and align the choice with the client’s liquidity goals, transaction timing, and overall wealth strategy to ensure the funds arrive exactly when they are most valuable.

Turning Knowledge into Client Value

By clearly explaining the timing, payout process, and permitted uses for each option, you can help clients avoid costly surprises and choose the approach that supports both their homeownership and financial objectives. To provide your clients with tailored solutions and competitive options, partner with nesto’s mortgage experts today. Together, we can ensure the most suitable mortgage strategy for every client’s unique financial roadmap.

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Why Choose nesto

At nesto, our commission-free mortgage experts, certified in multiple provinces, provide exceptional advice and service that exceeds industry standards. Our mortgage experts are salaried employees who provide impartial guidance on mortgage options tailored to your needs and are evaluated based on client satisfaction and the quality of their advice. nesto aims to transform the mortgage industry by providing honest advice and competitive rates through a 100% digital, transparent, and seamless process.

nesto is on a mission to offer a positive, empowering and transparent property financing experience – simplified from start to finish.

Contact our licensed and knowledgeable mortgage experts to find your best mortgage rate in Canada.

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