A clawback that only applied early, charged at maturity

A cash-back mortgage's clawback clause exists to protect the lender if the borrower leaves before the lender has recovered the cost of the incentive -- an early, mid-term discharge. A mortgage reaching its own scheduled maturity is the opposite of an early discharge; it is exactly what the term contemplated from day one, and nothing in a properly drafted clawback clause should apply to it at all.

Nothing about the household's own file was unusual -- a straightforward five-year term, run to its own natural end. The error sat entirely in how the discharge statement was generated, not in anything the borrowers had done.

The rate-shopping math and the clawback question were two separate calculations, and neither depended on the other -- the switch was worth doing regardless, and the clawback was owed regardless of which lender the household chose next.

The $4,050 clawback and the $139/mo rate savings never depended on each other -- the switch was worth doing on the rate alone, the trade-off cash-back mortgages weigh against a lower rate from day one, and the clawback was either owed or not owed on the clause's own terms, entirely separate from which lender the household moved to next.

Reading the commitment letter's clawback clause against the discharge statement is what surfaced the error -- the two documents disagreed, and only one of them was actually correct.

A courtier hypothécaire licensed under Quebec's Act respecting the distribution of financial products and services treated the discharge statement as a document to verify, not a bill to simply pay.

First, pulled the original commitment letter. Read the clawback clause's own conditions directly, rather than relying on the discharge statement's summary of what was owed.

Second, confirmed the clause's actual trigger. The clause named an early, mid-term discharge specifically; nothing in it named maturity, and this mortgage had reached its own scheduled maturity in full.

Third, raised the discrepancy with the lender's discharge department directly. Presented the commitment letter's own language against the discharge statement's charge, rather than assuming the newer document was automatically the correct one.

The straight switch closed at 4.55%, exempt from the formal stress test under OSFI's own switch rule, with no clawback paid -- the full $4,050 error caught and removed before it ever left the household's equity.

The clawback correction and the rate switch are two independent outcomes: the household would have been owed the same $4,050 correction even had they simply renewed with the incumbent lender instead of switching.

• 01A cash-back mortgage's clawback clause has its own specific trigger. Read it for what it actually says -- most apply only to an early, mid-term discharge, not to a mortgage reaching its own maturity.
• 02A discharge statement is generated by a system, and systems make this exact mistake. A statement is a claim to verify against the original contract, not a bill to accept at face value.
• 03Pull the original commitment letter before disputing a discharge charge. The letter's own clause language is the only authority that actually settles the question.
• 04A clawback dispute and a rate switch are separate decisions. Correcting an error on the discharge statement doesn't depend on which lender the household moves to next.
• 05A five-year-old contract's fine print is still worth reading at maturity. The clause that mattered here was written the day the mortgage was signed, not something new at renewal.