If you’re in the market for a new home loan you’ve probably heard about cashback deals. Whether you’re purchasing a new property, or refinancing an existing home loan, it’s important to find the best deal possible.
Sometimes, a great home loan deal might include a cashback offer, but it probably shouldn’t be your priority. In this article we’ll explain what home loan cash deals are, how you can qualify and whether they’re worth it.
Home loan cashback is a deal offered by banks and lenders to attract more customers. Typically, a lender will promise a certain amount of cash back if you take out a home loan with them. As an alternative to receiving this in cash, some lenders offer to cut the fees you would normally be charged.
Cashback is part of a range of incentives lenders use to encourage borrowers to choose them in a competitive market.
The amount of cash you could get back will depend on the lender. These days, it’s common to get back between $1,000 and $4,000 in cash.
When the Reserve Bank of Australia (RBA) lowered the cash rate, most lenders followed suit and lowered interest rates for their customers. This, paired with there being more lenders than ever, has made the mortgage market very competitive.
In order to stand out from the crowd and gain customers, many lenders are extending offers to new customers, such as cashback deals, gift vouchers and zero fee home loans. They are particularly common in 2021 with banks wanting to provide customers with a little more confidence in the COVID-19 recovery period.
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Most lenders require you to meet certain criteria in order to be eligible for a cashback deal. These generally include:
Every lender will have slightly different terms with regard to their cashback deals, so it’s important to check for individual requirements. Some cashback schemes are exclusively for first home buyers, while others are targeted towards those refinancing and switching to a new lender.
Home loan cashback deals can be very attractive to borrowers looking to maximise their cash flow. However, remember to consider the home loan as a whole product, rather than just a mortgage with a bonus.
Remember to consider the other aspects of the home loan, including:
A cashback bonus might not be all that appealing in the long run if your interest rate is higher than the standard. Luckily, if you end up with a poor interest rate, you can usually refinance with ease unless you’re locked into a fixed term loan.
Take the time to compare different home loans before committing to one just because it has a great sign-on offer. There are a lot of different lenders out there, so it’s smart to consider a different lender than you would normally go with. For example, if you typically stick with a major bank for all financial services, you might want to see if you can get a better deal with an emerging, online lender.
Sometimes the best home loan for you simply won’t have any unique sign up deals — it could just be a solid low interest home loan with a lender you trust.
Cashback deals and other home loan incentives change every month. It’s a good idea to speak to your mortgage broker or a Home Loan Specialist to find out what deals are out there and whether you qualify.
Roll your credit card, car or personal loans into your home loan.
Most cashback deals are targeted to borrowers refinancing an existing home loan and few are available for new home buyers. Deals change month to month, so you can sometimes find cashback deals that new home buyers are eligible for.
New home buyers should look for other offers. These may include:
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The information in this post is general in nature and should not be considered personal or financial advice. You should always seek professional advice or assistance before making any financial decisions.
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