Banks back to their bad old ways with $4,000 cashback offers to get you to mortgage switch

By Bernadette Chua |

Borrowing it

Home Loans

Banks are attempting to lure new customers with cashback offers to refinance their mortgage. But the offers are not what they seem.

According to the Australian Bureau of Statistics, 113,000 people in the last four months to July have changed lenders through refinancing. When the pandemic first hit, there was an unprecedented spike in numbers of owner-occupiers refinancing as people clamped down on their budgets.

A slew of financial lenders are offering thousands of dollars through cashback incentives of up to $4,000. For instance, Suncorp is offering $2,000 cashback when you refinance between $250,000 and $749,999.99 with a loan to value ratio of 90 per cent or less, or $3,000 cashback when you refinance $750,000 or more with an LVR of 90 per cent or less.

The bank is also offering an additional $1,000 cashback if you’re a teacher, health worker or a police officer.

Steve Mickenbecker from Canstar said that people should be wary when looking to refinance, if they are only looking for cashback rewards.

He maintains that an ongoing low rate is a better deal in the long run than upfront cash incentives.

But he did point out that some banks were offerings a combination of cash deals with a competitive rate.

“Many of the banks are offering around $2,000 in cashback incentives, with one bank offering up to $4,000. But Australians have to look at it in the context of a 30-year loan, that $4,000 you get back in cash is what you would pay off in one month of your loan,” he said.

“Refinancing your loan for a better rate, say at 1.89 per cent with a 60 per cent LVR, will make refinancing beneficial. But the whole market at the moment with lenders, is looking for that refinancing market.”

The other thing Mr Mickenbecker pointed out is around 75 per cent of Australians are still with the big four banks, and generally, it will be hard to sway a big four to a lower rate than some of the smaller lenders.

“Customers might be able to negotiate a fixed rate at around 2.19 or 2.09 per cent with one of the big banks. But if you are looking for a variable rate, there are some great deals to be had,” he said.

“I suggest that people looking to refinance be ruthless and make sure they get the best deal. If a lender is offering 2.5 per cent, you’ll be able to find a better deal. Make sure you also have a clean record. If you have been making your repayments on time, then you are in an attractive position. It’s all about consumer hierarchy at the moment. It’s all about lenders looking for quality loans.”

Nicole Pedersen-McKinnon wrote in the Sydney Morning Herald that if you consider moving a $400,000 home loan from a typical discounted big-four bank interest rate of 3.6 per cent to a cheaper loan with an offset account of 2.32 per cent, then you would save over an identical remaining 25-year period, a whopping $79,677. But she said it’s crucial that you refinance a loan over an identical period otherwise you will end up paying a mountain of interest, no matter how low the rate is.

Here are some of the best current promotions and offers according to Canstar:

Home loan cashback sales and promotions
Lender Deal Conditions Expiry
ANZ Get a rebate of up to $1,000 on your conveyancing costs if you’re an eligible first home buyer (including recipients of State or Territory government first home buyer concessions) Only available for home loans of $250,000 or more. Must apply by 30 September 2020 and draw down loan funds by 31 December 2020. Eligibility criteria and T&Cs apply. 30/09/20
Bank of Melbourne Get $2,000 cashback when you refinance with selected Bank of Melbourne home loans, or $3,000 if you apply to refinance online and are an eligible $2000 cashback offer is for new owner occupier loans with principal and interest repayments and investment loans. Available on Advantage Package and Basic home loans. $395 annual package fee. $250k min loan per property refinanced. Excludes Portfolio Loans, switches and refinances from within Westpac Group. Applications must be received by 30 September 2020 and loan settled by 30 November 2020. One $1,000 Bonus Refinance Cashback offer is available for owner occupier with principal and interest repayments and investment loans with a maximum LVR of 80%. T&Cs apply. 30/09/2020
BankSA Get $2,000 cashback when you refinance your home loan with BankSA, or $3,000 if you apply online as a new owner-occupier. For new owner occupier loans with principal and interest repayments and Investment loans. Available on Advantage Package and Basic home loans. $395 annual package fee. $250k min loan per property refinanced. Excludes Portfolio Loans, switches and refinances from within Westpac Group. Applications must be received by 30 September 2020 and loan settled by 30 November 2020. T&Cs apply. 30/09/2020
Commonwealth Bank Get $2,000 cashback when you refinance your eligible home loan with CommBank. Available for owner occupied (principal and interest), investment loans and Viridian lines of credit. Minimum refinance amount of $250k applies. Applications must be received by 31 October 2020 and loan funded by 31 December 2020. T&Cs apply. 31/10/2020
Newcastle Permanent Get $2,000 cashback when you refinance your eligible home loan with Newcastle Permanent. Available for both owner occupied and investment home loans. Minimum loan size of $250,000, and maximum LVR of 80%. Applications must be made by 30 November 2020 and loan must be funded by 31 January 2021. T&Cs apply. 30/11/2020
RAMS Get $2,000 cashback when you refinance your home loan to a new RAMS Home Loan. On selected loans with a minimum amount of $250k only. Excludes Line of Credit Loans, switches and refinances from within Westpac Group. Available on eligible applications received between 1 July 2020 and 30 September 2020 and settled by 30 November 2020. Check with RAMS for full T&Cs. 30/09/2020
St.George Bank Get $2,000 cashback when you refinance your home loan with St. George Bank, or $3,000 if you apply online as a new owner-occupier. For new owner occupier loans with principal and interest repayments and investment loans. Available on Advantage Package and Basic home loans. $395 annual package fee. $250k min loan per property refinanced. Excludes Portfolio Loans, switches and refinances from within Westpac Group. Applications must be received by 30 September 2020 and loan settled by 30 November 2020. T&Cs apply. 30/09/2020
Suncorp Get up to $4,000 cashback when you refinance your home loan with Suncorp. Get $2,000 cashback when you refinance between $250k and $749,999.99 with an LVR of 90% or less, or get $3,000 cashback when you refinance $750,000 or more with an LVR of 90% or less. Receive an extra $1,000 cashback if you’re a teacher, health worker, or another eligible occupation. Must apply by 30 September and settle by 29 December. T&Cs apply. 30/09/2020
Virgin Money Get $2,500 cashback when you refinance with a Virgin Money Reward Me Home Loan. Available on new refinance applications received between 29 August 2020 and 29 November 2020 for eligible new fixed rate owner occupied principal and interest refinance loans settled by 28 February 2020. Minimum loan amount $300,000 and up to 80% loan-to-value ratio. Not available for interest only lending or refinancing or restructuring existing Virgin Money home loans. Check with Virgin Money for full T&Cs. 29/11/2020
Westpac Get $2,000 cashback when you refinance your home loan with Westpac. Available on Premier Advantage Package and Flexi First Option loans. $250K min loan per property. $395 annual package fee applies. Must apply by 30 September 2020 and settle by 30 November 2020. Excludes switches and refinances of home loans within Westpac Group. T&Cs apply. 30/09/2020

Other sales and promotions – rewards points, reduced rates, and lower fees

The following home loan offers allow the customer to take advantage of various other bonuses, such as lower interest rates (fixed and variable), reduced or waived fees and bonus rewards points in some cases.

Other sales and promotions – reduced rates, fees and free rewards points
Lender Deal Conditions Expiry
ANZ
  1. Loan approval fee (usually $600 according to ANZ) and renegotiation fee (usually $200 or $350, depending on change requested) waived on selected Simplicity PLUS home loans.
  2. Save over $1,800 in the first year on ANZ’s Breakfree home loan package.
  1. Customers must request waivers or refunds as they may not be applied automatically. In some instances, customers may receive a refund instead of a waiver of loan approval fee or any renegotiation fee. Other T&Cs may apply.
  2. Must take out a $250,000 ANZ Standard Variable Home Loan with a 0.60% p.a. interest rate discount and fee waivers under the ANZ Breakfree package
  1. Until further notice (can be withdrawn or changed at any time, ANZ says)
  2. Until further notice
Beyond Bank No upfront or ongoing fees (save over $500) on Special Low Rate Variable Home Loan. New owner occupied home loans of at least $150,000 with a maximum LVR of 80%. Other T&Cs may apply. Until further notice.
Gateway Bank  Get a discounted rate on the Premium Package Variable Home Loan, with an extra 0.10% p.a. in interest on term deposit accounts. Available for new loans of $150,000 or more and top-ups of $50,000 or more on owner-occupier loans with a loan to value ratio of less than 80% with principal and interest repayments. Approved loans must be funded within 12 weeks of the application date. Other T&Cs may apply. Until further notice.
ING Split your loan between an Orange Advantage home loan and a Fixed Rate home loan and get the $499 Fixed Rate home loan application fee waived. For owner occupier borrowers, you’ll receive a fixed interest rate discount of 0.10% p.a. off the advertised fixed rates. In the case of owner-occupier borrowing, max LVR limits may apply. Other T&Cs may apply. Until further notice.
loans.com.au Receive a $5,000 limit Visa Debit Card with 0% interest for the life of the loan when you take out the ZIP Home Loan. ZIP Home Loan available for owner occupied loans, up to 80% LVR with principal and interest repayments only. ZIP Home Loan Visa Debit Card has maximum limit of $5,000, and cannot be used as part of loan settlement. Other T&Cs may apply. Until further notice.
Newcastle Permanent Get either a 1.26% or 0.86% discount on the Real Deal Home Loan interest rate when you meet one of the LVR requirements. The discount you receive will depend on whether your LVR is 80% or less or 81–94% respectively. Available for new owner occupied home loans of $150,000 or more with principal and interest repayments. Other T&Cs may apply. Until further notice.
QBANK Discounted rate for new loans when you set up a monthly salary credit on selected products. Plus, save up to $700 on upfront fees, and get an optional 20% off a new QBE home insurance policy for the first year. Discounted rate applies to Classic Home Loan applications for more than $150,000. Customers must deposit a salary credit of at least $1,500 a month into a QBANK transaction account. Upfront fees deal applies to owner-occupied loans only. Other T&Cs may apply. Until further notice.
0 Join the Discussion
Inline Feedbacks
View all comments
0
Would love your thoughts, please comment.x