Chexy Now Rewards Mortgage Payments. Aeroplan Points Are Only Half the Story

A mortgage is one of the biggest bills most homeowners pay each month, and one of the least rewarding. Chexy would like to make things more interesting.

Chexy recently launched what it calls ‘Canada’s first mortgage rewards program.’ Members can earn one Aeroplan point for every $1 of eligible mortgage payment and one Status Qualifying Credit (SQC) for every five Aeroplan points earned. For every mortgage payment Chexy processes this way, it charges a standard fee of 1.75%.

But I wouldn’t dismiss this new Chexy program entirely. The SQC create one pretty interesting exception: someone already close to Aeroplan Elite Status may be able to use their mortgage to close the gap surprisingly cheaply.

In our example below, the final 2,500 SQC needed for 25K Status effectively cost just $31.25 after accounting for the value of the points.

So: Worth it for the points alone? Probably no. Worth it for closing a status gap? Maybe.

Here’s how I got there.

You can’t typically make a mortgage payment with a rewards credit card, which means all that spending normally earns you nothing.

Chexy gets around the rewards roadblock without using a credit card at all. It acts as an intermediary, withdrawing the mortgage payment and its fee from your bank account, then sending the payment to your lender. In return, you earn Aeroplan points and SQC through Chexy.

The service works with virtually any Canadian mortgage lender. You don’t need to refinance or switch lenders.

However, in exchange for rewards, Chexy becomes yet another company involved in a payment most homeowners would prefer to remain aggressively uneventful. Chexy’s terms hint at some potential complications: payments typically reach lenders on schedule, although its terms allow up to seven business days in certain circumstances. Aeroplan points may take about 60 days to appear. So, it’s a good idea to monitor both accounts, especially after your first payment.

It’s tempting to think Chexy’s fee means your mortgage now costs 1.75% more. It doesn’t. Your interest rate, balance and amortization stay the same.

Your bank account can’t make that distinction, though. More money will still be leaving it every month.

So, to scratch the mathematical itch, let’s pretend the fee is baked into your mortgage. What would that extra 1.75% actually feel like?

Let’s say you have a $600,000 mortgage at 5%, amortized over 25 years. Your monthly payment would be about $3,489.63. Chexy’s fee would add $61.07, bringing the total to $3,550.70.

That’s roughly what you would pay on a $600,000 mortgage at 5.18%, or on a $610,500 mortgage at 5%.

You don’t actually owe another $10,500, and Chexy hasn’t changed your rate. It’s just another way of showing what the fee adds to your monthly budget.

At one point per $1 and a 1.75% fee, you’re effectively paying 1.75 cents for every Aeroplan point you earn.

That makes 1.75 cents the break-even value. You need to get at least that much from each point to recover the fee through Aeroplan rewards alone.

However, we like to use 1.5 cents per Aeroplan point as a practical benchmark for redemption value. It isn’t the most you can get, or the least. It’s a reasonable target that helps you avoid a lousy redemption.

At that valuation, every point costs 1.75 cents and gives you about 1.5 cents back. That leaves you 0.25 cents short.

On a $3,000 monthly mortgage, you would pay $630 in Chexy fees over the course of the year and earn 36,000 points. At 1.5 cents each, those points would be worth about $540, leaving a $90 shortfall.

Value the points at two cents each and the conclusion flips: they’re worth $720, putting you $90 ahead. So, same mortgage, just a different assumption.

If you consistently get more than 1.75 cents per point, the points can justify the fee. If you redeem for less, they can’t. Point valuations are estimates, not exchange rates, and another decimal place won’t make them more certain.

SQC aren’t points you can spend. Think of them more like a progress bar toward Aeroplan Elite Status.

The first threshold is Aeroplan 25K Status, which requires 25,000 SQC within a calendar year. Reach it and you get Elite Status benefits (the reason SQC can have value) for the rest of that year and the following year.

But a pile of SQC that leaves you well below 25,000 may not do much for you. The same SQC become much more useful if they’re what gets you across the line before the year’s up.

Now we can put a price on that progress.

Chexy mortgage payments earn roughly one SQC for every $5 paid. At our 1.5-cent point valuation, a $5 mortgage payment earns five points worth 7.5 cents and costs 8.75 cents in Chexy fees.

The 1.25-cent difference is effectively what you’re paying for one SQC.

Put roughly $125,000 in mortgage payments through Chexy within a calendar year, and you could theoretically earn 25K Status without taking a single flight. After accounting for the 125,000 points, you’re asking whether that status is worth the remaining $312.50.

But who can afford to make monthly mortgage payments of nearly $11,000? And, if they exists, would they care about Aeroplan points like the rest of us?

The more realistic use is closing a smaller gap.

Suppose you’re sitting at 22,500 SQC with five $2,500 mortgage payments still due soon enough for the resulting SQC to count that year. Put those payments through Chexy and you’d earn about 2,500 SQC and 12,500 points. The fees would total $218.75, while the points would be worth $187.50 at a 1.5 cent valuation. That leaves $31.25.

If those SQC get you to 25K Status, the question becomes pretty practical: Are the free checked bag, priority airport services, eUpgrade credits and other benefits worth more than $31.25 to you?

That’s more persuasive than starting from zero with more than $10,000 in monthly mortgage payments and a dream.

SQC earned through Chexy count toward Aeroplan’s shared annual cap of 25,000 SQC from eligible partners and qualifying Star Alliance flights. Chexy doesn’t get its own bucket.

And Status is only valuable if you’ll use it. Paying for airport benefits and then rarely visiting an airport would be an impressively roundabout strategy.

After running the numbers, I’m pretty much where I started: Maybe?

For a casual Aeroplan collector, paying your mortgage with Chexy probably isn’t worth it. At our benchmark, the Aeroplan points you’d earn don’t cover the fee, and “almost breaking even” isn’t much of a reason to add another company to your mortgage payments.

The more interesting case is someone already closing in on Elite Status. If a relatively small amount of mortgage spending gets you across an SQC threshold and you’ll actually use the benefits, I can see the argument.

Your answer may be different. Maybe you consistently redeem Aeroplan points above 1.75 cents. Maybe you value 25K Status at $500. Maybe priority boarding inspires nothing in you but a shrug.

Chexy has made the calculation possible. Whether the calculation works is up to you.