Our take: The effective rate as of today (assuming you pre-pay your mortgage with the cash back) is roughly 3.75% on a $200,000 mortgage. Not bad given that 5-year rates are in the 3.89% neighbourhood at the moment. Just keep in mind, there is a 100% clawback of the up-front cash-back (i.e. the 0.25%) if you break the mortgage before maturity.
CIBC’s Variable Flex Mortgage With Cash Back
A variable-rate mortgage at prime – 0.50% plus 2% cash back (or 3% for mortgages over $400,000)
The fine print: CIBC’s cash-back offer must close in 30 days, is not available on purchases and there is a 100% clawback on the cash-back if you break the mortgage even one day early.
In the event you move, you can port and increase
Our take: The 2% cash-back option has a good effective rate (assuming you take the cash-back and use it to pre-pay your mortgage right away). Many people, however, will be better off in an unrestricted variable at prime – 0.85% or so.
The 3% cash-back variable is much more compelling. You won’t find a lower effective rate on a variable product. A Mortgage Centre contact told us it’s the equivalent of prime – 1.1%. By our math, the effective rate is slightly better than that. This product therefore presents a niche competitive edge for MC brokers.