Corporate Mortgage Buydowns: TMG’s Plan

TMG-Group-Mortgage-PlanWith stricter mortgage guidelines suppressing volumes and competition squeezing margins, mortgage brokers are increasingly on the lookout for new business generators.

TMG The Mortgage Group equips its brokers with one such initiative. It’s called the “Mortgage Perks Plus program” and it launched October 21.

Mortgage Perks Plus is a service that TMG pitches to companies. It lets those companies offer employees the benefit of lower mortgage rates.

Essentially a firm pays to “buy down” the interest costs of its personnel. These subsidies help the company attract and retain good employees, while helping employees slash their amortization and interest costs.

Here’s a rundown on how it works:

  • Employers are able to subsidize any amount—up to the full interest payment on a mortgage.
  • Interest subsidies can be capped, if desired, to limit the cost on big mortgages.
  • Rate subsidies are typically 100% tax deductible for the employer.
  • Mortgage subsidies can also potentially be non-taxable benefits to employees, but here’s where it gets complicated. Specific requirements must be met for this to happen. One requirement, according to TMG’s Ming Wong, Head of Group Mortgages, is meeting section 80.4 of the tax code. That’s something we won’t even attempt to interpret. Professional tax advice is mandatory. For what it’s worth, CIBC states this in its group mortgage program:
    • “If [the] net interest rate (actual mortgage rate minus mortgage subsidy) stays at or above [the] Prescribed Rate…, then [the] subsidy is potentially a tax-free benefit.”(The prescribed rate is currently 2% and is set each quarter.)This is one of multiple tax-related criteria a company must consider.
  • On relocations over 40 kilometres, employers can subsidize the full interest amount on the first $25,000, for a maximum of five years.
  • TMG provides the employer with a customized website, marketing collateral (e.g. pay stub inserts and brochures), and information guides for employees. The basic program can be set up in just a few weeks.

Programs like this have been around a while, but TMG’s is one of the more comprehensive at the broker level. And, unlike similar bank programs, TMG’s Mortgage Perks Plus plan isn’t limited to one lender. Since it’s broker-driven, employees who get this benefit deal with agents who shop multiple lenders for the best terms.

Here are similar plans for those wanting to research this niche further:


Rob McLister, CMT

  1. This isn’t something new…and shame on TMG for delivering what it claims to not do… the LOW RATE, race to the bottom pitch.
    This is suppose to be good for the industry… getting employers to buy down the rates??
    And you are right..This isn’t new. Smart employers and HR managers have done for years…ask any employee at the Ministry of Defence!

  2. Always a cynic in every crowd.
    Of course people are doing this already, but very few brokers are doing it. It’s an excellent strategy but you need an infrastructure and knowhow to support it. Most brokers can’t do it on their own, or at least not effectively. What TMG brings to the table adds value for its brokers, for employers and for the consumers who benefit.
    Don’t get all high and mighty about rates either. Consumers and companies both win here. What should we as a broker industry do? Let the banks dominate the group mortgage market?
    What a completely silly post “broker”

  3. How is it a race to the bottom if “employers and HR managers have done it for years?”
    It isn’t TMG buying down the rates. The employers themselves provide the subsidy.

  4. its also an old oil patch game in Alberta, Suncor and Syncrude as well as Opti and Shell all have a similar program, difference being they block brokers from participating and only allow the big banks to offer it because its supposedly hard to manage…truth is the pay out penalty if you want to get away from the employer isn’t worth it in a lot of cases. Suncor employees have to commit to working for at least 5 yrs or pay back the subsidy they’ve received. Maybe not new but new to the broker side…and better an employer buying down the rate than my commission. I think it will be hard for the lender to monitor=expensive.

  5. Cute move….but for employees of FI’s who get an employee discount on their mortgages, the discount is deemed a taxable benefit….The logic of the Canadian tax man astounds me!
    Has anyone ever seen this buy down move, challenged by CCRA?

  6. Yes, the banks do offer subsidy program to the companies you noted. I would like to add that the TMG Mortgage Perks Plus program is not a mortgage rate buy down program. It is an interest rate subsidy program offered by employers as an enhancement to their benefits packages and part of their strategy to recruit and retain quality employees.
    The contract rate remains the same, however the employee receives an interest rate subsidy rebate from the employer. If anyone would like to discuss the nuances of this program I would be happy to speak with you in person. Feel free to call me directly at 1 .877.698.7623.

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