Cashback value: Could looking beyond the big banks save you money?

Cost of living pressures, mortgage stress and the fixed rate cliff are all contributing to record numbers of Australians refinancing their home loans. Competition for business from these refinancers has heated up - so much so, that some of Australia’s leading banks have pulled their cashback deals.

Borrowers looking for alternative options could choose to look beyond the big four banks. As well as finding competitive rates and financial expertise, you may be able to access a cashback offer that could make a big difference to the cost of refinancing.

For example, IMB Bank has a history going back to 1880, so you should be able to put as much confidence into this mutual lender as one of the bigger banks. Additionally, IMB was recently awarded RateCity Gold Awards for Best Variable Home Loan 2023, and Best 3 Year Fixed Principal & Interest Home Loan 2023, which may bolster your confidence in the performance of its financial products.

IMB Bank is offering a limited-time $4,000 cashback deal for eligible borrowers who choose to refinance their mortgage with the lender. This includes both a variable rate budget offer and a 3-year fixed rate deal for borrowers hoping to lock in their interest rate in case of future changes from the RBA and a potential recession.

To give you an idea of how this could affect your bottom line, RateCity research recently found that the average discharge fee a refinancer might pay at the end of June 2023 was $320. Even when you consider IMB’s total estimated upfront fees of $799, the $4000 cashback will still leave you around $2,881 ahead. 

This money could help to cover any other costs and expenses when refinancing, such as solicitor or conveyancing fees. Alternatively, you could stick some of this money on your credit card to help ease some of your household’s cost of living pressure.

Both cashback offers expire at the end of July 2023, so if one of these loans suit your needs, you may need to move quickly so you don’t miss out.

Of course, before you switch home loans it’s essential to do your research and compare the available options. Of the big four banks, only ANZ is offering a comparable cashback offer, and there are just 13 other lenders with cashback deals to compare.

Looking beyond the cashback, a refinancing calculator can help you get a better idea of the interest savings you could enjoy by switching home loans, and how long it could take you to “break even” on your new mortgage.

You should also confirm the lender’s terms and conditions to make sure their loans will be suitable for you. A free property report could help you get an idea of your current home equity, so you can estimate your own Loan to Value Ratio (LVR) before the new lender’s valuer comes back with their findings.

A mortgage broker could also help you crunch some of the numbers around refinancing your home loan, and help you work out which home loan options could best suit your needs. Just remember that a broker may not compare every mortgage lender on the market, so there could be other home loan options available that are worth considering.