While many borrowers are tightening their belts and watching out for better home loan deals to help protect their finances, some mortgage lenders are offering incentives to attract the business of new borrowers, including cashback deals.
What is home loan cashback?
A cashback deal is a bit like one of those old TV promotions where you’d order a mail-order product and get a free set of steak knives. Except instead of getting kitchen utensils when you successfully apply for and settle a home loan, you instead get cold, hard cash in your bank account – often a couple of thousand dollars.
What are the benefits of home loan cashback?
In most cases, there are no limits or restrictions on how you can use the cash from a home loan cashback deal – it’s just money in the bank. In theory, you could use it to go out for a very fancy dinner to celebrate your property purchase. However, it's important to check the terms and conditions, just in case.
Home loan cashback deals can also be handy for managing the extra costs of your property purchase, such as solicitor and auction fees, stamp duty, property inspections and building reports. You may be able to put part of your cashback towards covering your new lender’s upfront fees, and if you’re refinancing, any discharge fees and charges for exiting your old loan, though you may not be allowed to use the cashback for servicing your new home loan's repayments.
Are home loan cashback deals worth it?
It can be tricky to gauge the true value of home loan cashback. While applying for one of these deals can effectively net you free money in the bank, it’s also important to consider the loan’s long-term cost.
Generally, the more features and benefits offered by a home loan, the more it may cost in fees and interest charges. If a home loan with a cashback deal charges higher interest rates or fees than a more basic “no-frills” home loan, it may end up costing you more in the long term, even accounting for the value of the cashback deal.
Consider using a mortgage calculator to compare the cost and value of different home loan deals before you apply. If you need more help, a mortgage broker may be able to advise you which lenders offer valuable deals you may be eligible for.
Who offers home loan cashback deals?
Some of the lenders offering cashback deals on selected home loan packages at the time of writing include:
|ANZ||Refinance (brokers only)||Up to $4000|
|Suncorp||Refinance||Up to $3000|
|Bank of Melbourne||Refinance||$2000|
|People's Choice Credit Union||Refinance||$2000|
|MOVE Bank||New customers||$1000|
Different mortgage lenders often offer new home loan offers and promotions throughout the year, so if you're looking for a home loan with cashback, it's important to keep an eye on the market and the check the terms and conditions of home loan deals.