A bank handing you thousands in cash to refinance your home loan can sound like a sweet deal, but is it too good to be true?
A cash-back offer is a marketing incentive to entice consumers to switch to a provider’s product or service.
If you’re already reducing your repayments by refinancing to a lower interest rate, then these cash back offers are a great bonus. You can put it straight towards paying off your home loan or pay for other purchases.
Should you be cautious of cash-back offers?
While the offer is enticing, Matt from MC Mortgage Solutions says that you still need to look at the entire loan package and ensure it’s the best for your individual circumstances. “You need to consider the overall cost savings and the basics of the loan such as rate, fees and features” says Matt.”
Home owners who are refinancing should prioritise reducing their home loan repayments with a lower interest rate, and consider the cash as a bonus afterwards.
What’s the fine print?
Lenders change their cash-back offers quite regularly. Home owners may find that an offer expires in a few months and therefore they will need to move quickly.
“There’s usually a minimum loan size involved. The lowest I’ve seen is about $150,000, but most are $250, 000” Matt said.
“You also need to meet their criteria for dates of submission and settlement.”
Some banks or lenders will allow you to claim the cash-back offer on more than one property, while others have a limit of one per customer.
Which providers are giving cash back to refinance?
Matt says he’s seen offers from $1000 to $4000 in market, but incentives don’t stop at cash.
“There are lenders that instead of offering cash back, they offer other sorts of discounts of fees or Lender’s Mortgage Insurance” he said
As home loan products become increasingly competitive, more lenders are coming forward with different incentives.
Commonwealth Bank is offering $2000 cash back with a minimum loan value of $250,000.
ANZ is offering $3000 cash back on loans of $250,000 or more. Loans between $150,000 and $250,000 are instead eligible for $1200.
Westpac, St George and Bank of Melbourne are all giving $2000 cash back for each property refinanced with them, with a minimum loan value of $250,000. BankSA is also offering $2000 cash back but with a loan value of at least $200,000.
Virgin Money and BOQ are providing $2500 cash back with various conditions.
Suncorp Group’s offers start at $2000 cash back and increase up to $4000 exclusively for COVID-19 pandemic frontline workers.
Consulting a Mortgage Broker from MC Mortgages Solutions can help sift through all the offers available at the time from over 35 lenders. Our Brokers will be able to weigh up whether the cash-back offer is worth it, taking into consideration the fees and interest rate of the home loan.