How cashback deals can sweeten your new home loan

With home loan rates at record lows, cashback deals are a type of incentive that lenders are offering to sweeten the pot for new customers.

Cashback offers are when a lender offers you perks – typically cash – upon your home loan approval. A cashback offer may range between $1000 – $4000, and may come in the form of a direct deposit, a subtraction from your mortgage or even as a gift card.

A recent Finder survey found that 1 in 4 Australians (25%) admitted to preferring a home loan with a cashback offer over one with a low interest rate.

Men (34%) are more than twice as likely as women (16%) to favour a one-off cash bonus over long term loan savings, according to the survey. Over one third of millennial respondents (34%) noted they prefer a cashback loan, compared to just 10% of baby boomers.

Of course there is more to a home loan than a cashback deal and it’s crucial you compare any fees and features offered, as well as the advertised rate and comparison rate. But it goes to show that cashback deals are worth considering factoring into your first or next home loan search.

 

Let’s explore some of the benefits of these special offers, and how big of a cash bonus you may be able to access to help you meet your goals.

The benefits of a cashback offer

While the majority of cashback offers may be reserved for refinancers, they are still available to both owner-occupiers and investors on the search for a new loan.

Depending on the amount a lender is willing to offer you, there are a range of purposes you may use a cashback deal for, including:

 

1. To pay for the cost of refinancing

As the majority of cashback deals are typically for refinancers, one significant benefit to choosing a cashback home loan is that you may use the money to pay for the cost of refinancing. Switching a home loan can cost you in the form of exit fees (if leaving a fixed rate loan) as well as upfront fees, like application fees and valuation fees. All these charges can begin to stack up, costing between a few hundred to a few thousand dollars.

While refinancing to a lower interest rate loan is generally considered to “pay for itself” in lower monthly repayments, these upfront costs can still hurt your budget. Cashback home loan deals are one way you may be able to lessen the refinance sting.

Remember that you will still need to meet the eligibility criteria of the new loan provider, so ensure your credit history, financial situation and current loan-to-value ratio (LVR) meets these requirements.

 

2. To pay for home investments

Whether you’re a first home buyer or an existing homeowner, a cashback offer may allow you to invest in your home. This means you may be able to afford home upgrades or even purchase white goods and new appliances. This can be especially helpful if you’re a first home buyer who has spent the majority of your hard-earned savings on a home deposit and now have fewer funds to spend on home improvements or decor.

 

3. To pay for moving costs

Reduce Home Loans recently reported on the growing trend of home upgraders looking for a sea or tree change. With pandemic-related restrictions allowing more people to work from home than ever before, employees are being afforded the privilege of looking away from capital cities to live in for the first time.

A recent Sydney Morning Herald article reports that nearly seven out of 10 mortgage borrowers are “upgraders” seeking to improve the “amenity or location of their home”. If you’re considering a sea or tree change and looking to take out a new mortgage, it’s worth considering how a cashback home loan may help to pay for removalists, transport, and other moving costs.

 

4. To pay for mortgage costs

There are other costs to consider when applying for a mortgage outside of refinancing charges, particularly if you’re a first home buyer considering a cashback home loan. Some homeowners who take advantage of cashback deals may be able to use these funds towards costs like lender’s mortgage insurance (LMI) or stamp duty.

While LMI and stamp duty can climb into the tens of thousands of dollars range, particularly if you’re purchasing property in Sydney or Melbourne, a generous cashback offer may help to soften the blow. Particularly if you’ve depleted your savings by saving up for a sizeable home deposit.

 

What else to keep in mind about cashback deals?

As mentioned above, it’s important to remember that there is more to a home loan than the cashback deal being offered. It’s worth also comparing some of the key features of the home loan as well, including:

  • Interest rate – What is the advertised rate and comparison rate of the home loan, and how might this suit your budget and financial situation? Reduce Home Loans offers some of the lowest rate home loans in the market, frequently breaking records for our low rates.
  • Fees – What fees, if any, are being charged? Reduce Home Loans does not charge borrowers annual fees or monthly fees on many of its loans.
  • Features – Does the home loan offer any features you’d like with your mortgage, including the ability to make extra repayments or an offset account?
  • Loan term – Remember that if you’re choosing to refinance to gain a cashback deal, that you match the new loan term to your current term. If you only have 10 years remaining on your home loan and refinance to a new 30-year mortgage, you will pay considerably more in interest.

 

Cashback deals up for grabs

Reduce Home Loans offers some of the biggest cashback deals on the market, with up to a whopping $10,000 cash on the table – depending on the size of your mortgage.

​​Reduce Home Loans cash bonus offers:

$1,000 up to $2,000 with the Super Saver Cash Back Home Loan

Loan Amount Cash Bonus
$250,000 – $499,999.99 $1,000
$500,000 – $1,000,000 $2,000

 

$2,000 up to $4,000 with the Low Rider Cash Back Home Loan

Loan Amount Cash Bonus
$250,000 – $999,999.99 $2,000
$1,000,000 – $2,000,000 $4,000

 

$3,000 up to $10,000 with the Cash Back Hero & Investor Cash Back Hero Home Loan

Loan Amount Cash Bonus
$250,000 – $999,999.99 $3,000
$1,000,000 – $1,999,999.99 $5,000
$2,000,000+ $10,000

 

For more information on cash bonus home loans, or to speak to one of our home loan experts, please contact Reduce Home Loans on 1300 733 823.

 

Any statement/s are general in nature and do not take into account your financial personal situation, objectives or needs. You should consider whether any statement/s is suitable for you and your personal circumstances. Before making any financial decision, consider your circumstances and the product disclosure statement.

(29)    For the Rate Cutter Variable where the borrower pays $1170 upfront fees then a corresponding loyalty discount of 0.10% p.a. off the Rate Cutter Variable (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(27)    For the Investor Rate Slasher Cash Back Variable where the borrower pays $0 upfront fees then a corresponding loyalty discount of 0.06% p.a. off the Investor Rate Slasher Cash Back Variable (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(26)    For the Low Rider Cash Back Variable where the borrower pays $0 upfront fees then a corresponding loyalty discount of 0.06% p.a. off the Low Rider Cash Back Variable (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(25)    For the Economizer Cash Back Variable where the borrower pays an upfront fee of $697 then a corresponding loyalty discount of 0.08% p.a. off the Economizer Cash Back Variable (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(24)    For the Super Saver Cash Back Variable where the borrower pays an upfront fee of $697 then a corresponding loyalty discount of 0.10% p.a. off the Super Saver Cash Back Variable (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(23)    For the Super Saver Variable where the borrower pays an upfront fee of $1170 then a corresponding loyalty discount of 0.15% p.a. off the Super Saver Variable (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(22)    For the Economizer Variable where the borrower pays an upfront fee of $1,170 then a corresponding loyalty discount of 0.11% p.a. off the Economizer Variable (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(21)    For the Investor Cash Back Hero Variable where the borrower pays an upfront fee of $697 then a corresponding loyalty discount of 0.08% p.a. off the Cash Back Hero Variable (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(18)    For the Home Owners Dream 1 year fixed where the borrower pays an upfront fee of $697 then a corresponding loyalty discount of 0.20% p.a. off the Home Owners Dream reverted variable rate (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(20)    For the Cash Back Hero Variable where the borrower pays an upfront fee of $697 then a corresponding loyalty discount of 0.08% p.a. off the Cash Back Hero Variable (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(14)   For the Investor Rate Slasher where the borrower pays an upfront fee of $1,170 then a corresponding loyalty discount of 0.09% p.a. off the Investor Rate Slasher rate (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(12)   For the Investor Rate Lovers Interest Only where the borrower pays an upfront fee of $697 then a corresponding loyalty discount of 0.07% p.a. off the Investor Rate Lovers Interest Only rate (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(11)   For the Wealth Maximizer 3 year fixed Principal & Interest where the borrower pays an upfront fee of $697 then a corresponding loyalty discount of 0.20% p.a. off the Wealth Maximizer reverted variable rate (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(10)    For the Wealth Maximizer 2 year fixed where the borrower pays an upfront fee of $697 then a corresponding loyalty discount of 0.20% p.a. off the Wealth Maximizer reverted variable rate (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(9)    For the Home Owners Dream 3 year fixed where the borrower pays an upfront fee of $697 then a corresponding loyalty discount of 0.20% p.a. off the Home Owners Dream reverted variable rate (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(8)    For the Home Owners Dream 2 year fixed where the borrower pays an upfront fee of $697 then a corresponding loyalty discount of 0.20% p.a. off the Home Owners Dream reverted variable rate (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(7)    For the Investor Rate Slasher where the borrower pays an upfront fee of $1,170 then a corresponding loyalty discount of 0.09% p.a. off the Investor Rate Slasher rate (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(6)    For the Investor Rate Buster Variable where the borrower pays an upfront fee of $697 then a corresponding loyalty discount of 0.08% p.a. off the Investor Rate Buster Variable rate (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(5)    For the Rate Buster Variable where the borrower pays an upfront fee of $150 then a corresponding loyalty discount of 0.05% p.a. off the Rate Buster Variable rate (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(4)For the Rate Slasher Variable where the borrower pays an upfront fee of $1,170 then a corresponding loyalty discount of 0.08% p.a. off the Rate Slasher Variable rate (at that time) will automatically apply after the 5th anniversary of the loan. These fees and loyalty discount are factored into the comparison rate. The loan setup fees are not refundable.

(3) For the Investor Rate Lovers Variable where the borrower pays $0 upfront fees then a corresponding loyalty discount of 0.06% p.a. off the Investor Rate Lovers Variable rate (at that time) will automatically apply after the 5th anniversary of the loan. These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(2)For the Rate Lovers Variable where the borrower pays $0 upfront fees then a corresponding loyalty discount of 0.06% p.a. off the Rate Lovers Variable rate (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(1) For the Low Rider Variable where the borrower pays $0 upfront fees then a corresponding loyalty discount of 0.06% p.a. off the Low Rider Variable rate (at that time) will automatically apply after the 5th anniversary of the loan. These fees and loyalty discount are factored into the comparison rate. The loan setup fees are not refundable.

(28) For the Rate Crusher 1 Year Fixed where the borrower pays an upfront fee of $697 then a corresponding loyalty discount of 0.05% p.a. off the Rate Crusher reverted variable rate (at that time) will automatically apply after the 5th anniversary of the loan. These fees and loyalty discount are factored into the comparison rate. The loan setup fees are not refundable.

(19) For the 1 Year Fixed Wealth Maximizer where the borrower pays an upfront fee of $697 then a corresponding loyalty discount of 0.20% p.a. off the 1 Year Fixed Wealth Maximizer reverted variable rate (at that time) will automatically apply after the 5th anniversary of the loan. These fees and loyalty discount are factored into the comparison rate. The loan setup fees are not refundable.