Real Estate

Cashback offers: tempting reason to refinance

Cashback offers: tempting reason to refinance

With the Reserve Bank of Australia raising the cash rate again this month, now is a great time to consider refinancing - and that's not just because of a lower interest rate.

Your new loan's potential cashback offers are just what the doctor ordered for your struggling savings account.

Let's take a look.

Refinancing: what is it?

We've discussed refinancing quite a lot lately but let's quickly have another look at this popular option.

Refinancing simply means changing your existing mortgage product for a new one - which may include changing your lender too.

Yes, you can do both!

Accessing a lower interest rate is the main reason for refinancing, particularly at the moment.

But you may also want to access other home loan options that aren't available on your current one, such as a redraw facility or offset account.

Regardless of your reasoning, remember that there are costs associated with refinancing such as discharge fees.

Plus, the process can take some time - anywhere from a couple of days to a few months.

Cashback offers: what are they?

A cashback is a lender incentive tempting homeowners to change both loans and lenders.

For homeowners keen to access a lower interest rate or other loan options, cashback offers can be a highly tempting cherry on the cake.

And let's face it, any extra cash in our hip pockets these days is sorely needed.

The "cash back" itself is usually in the form of a lump sum payment deposited into your bank account once the refinance process has been ticked off.

Alternatively, a cashback offer may be the deduction of fees or a gift card.

Cashback Offers
Cashback offers, in the form of a lump sum payment or fee deduction, serve as an enticing incentive for homeowners.

Cashback offers: top tips

As we've said in the past, make sure you check every aspect of your new loan - and your new lender, if you're changing to another one.

Double-check what happens to your loan when the initial cashback deal ends as interest rates or other terms and conditions can change.

Also, remember that cashback offers may only be available for a certain period, amount, type of property, or loan-to-value ratio (LVR). and they'll feature different terms, conditions and lending criteria.

Cashback offers: where are they now?

The bad news for current homeowners is that lenders are now pulling back on cashback offers.

Only 12 lenders now offer cashback deals, which is down from the 35 offers available in March 2023, according to RateCity figures.

Three of the Big 4 Banks have also ditched their cashback offers with only ANZ still having such an option; however, even ANZ halved its incentive in August.

This drop follows a rush to refinance after the first cash rate rise in May 2022, with lenders responding by offering masses of cashback offers in a keen bid to win this mortgage war.

According to Yahoo Finance, almost $289 billion worth of loans have been refinanced since last May.

NAB chief executive Ross McEwan said in May that intense competition had forced the bank to sell loans at “sub cost of capital”.

Similarly, CBA chief executive, Matt Comyn, said cashback offers eroded bank profit margins.

As well,, Finance Brokers Association of Australia managing director, Peter White, said even the 12 cashback offers still available "don't have the impact they used to.”

“There are better deals elsewhere that are in the borrower’s best interests,” Mr White said.

However, if you're keen on a cashback deal, Lending Loop still has several cashback offers available through its mortgage brokers.

1. ANZ: $2,000 cashback

Available on loans of $250,000+ and an LVR of 80% or less 

No expiry date

2. Bank of Melbourne: $2,000 cashback

Available on loans with an LVR of 80% or less 

Applications must apply by November 30, 2023, and settle by March 31, 2024

3. Bank SA: $2,000 cashback

Available on loans of $200,000+ with an LVR of 80% or less

Offer may be withdrawn at any time

4. BOQ: $2,000 cashback

Available on loans of $250,000+ and an LVR of 80% or less

Offer may be withdrawn at any time

5. St George: $2,000 cashback

Available on loans of $250,000+ and an LVR of 80% or less

Offer may be withdrawn at any time

6. ME Bank: $2,000-$3,000 cashback

$2,000 offer - available on loans of $400,000+ and an LVR of 80% or less

$3,000 offer - available on loans of $700,000+ and an LVR of 80% or less

Offer may be withdrawn at any time

We're here to help

If you're keen to refinance - and snap up a great cashback deal as well - give the team at Lending Loop a call.

Our mortgage brokers have access to thousands of home loan products from over 40 lenders so we can compare multiple offers for you in one place, saving you both time and money.

Plus, we can also help you refinance your loan to help you keep more money in your pocket.

So, give us a call today at Lending Loop.

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