Who doesn’t love a good deal, right?
The cashback refinance home loan offers advertised by banks and lenders can look tempting, especially when they’re offering between $2,000 and $4,000 to switch to a new home loan agreement.
But are these cashback offers as good as they look?
What is a mortgage refinance cashback deal?
A home loan refinance cashback deal is a financial bonus offered by a lender to attract customers with home loans who are looking to refinance their mortgage.
The cashback money is paid into the customer’s nominated bank account after the new home loan agreement is signed and settled.
Customers may want to take advantage of lower interest rates. Or perhaps their financial situation has improved. By offering them home loan refinance cashbacks, banks and other lenders hope to welcome the customer through their doors rather the doors of their competitors.
For the customer, it can look as good as this.
A refinanced mortgage that’s better suited to your financial situation is convenient and easier on the budget. The lower monthly loan repayments will mean a family holiday or a renovation is possible. And the additional bonus of a few thousand dollars as a cashback deal is extra money on top of all the other good news.
But wait. You also need to consider how the new loan will fit into your financial situation, lifestyle and needs.
There are four important things to consider here:
- Is the interest rate on the new loan lower than your current loan?
- Can you obtain a lower interest rate from another lender who doesn’t offer a cashback incentive?
- Does the new lender provide high-quality customer service?
- Do the conditions of the proposed new loan agreement align with your financial situation and family needs?
Are cashback refinance deals available for all types of mortgages?
In general terms, banks and lenders offer cashback bonuses for both fixed and variable rate home loan refinancing.
Remember, however, that a fixed interest loan can’t be refinanced without breaking your loan agreement, unless you’re at the end of your loan term.
Breaking a fixed interest loan agreement can be expensive, and you need to discuss the pros and cons with your mortgage broker. If you were to go ahead, you would be breaching the terms of the contract you signed with your lender.
Cashback refinance deals can also be available for loans to both owner-occupied homes and investment properties.
How do I find the best cashback refinance home loan deal?
Your mortgage broker should know which lenders offer what type of cashback bonuses for refinancing home loans.
Cashback deals can vary between different lenders and this is usual practice. You’ll also find that individual cashback offers are generally only available for a limited time.
This is due to the eligibility requirements of different lenders.
For any refinance cashback offer you’re considering, it’s important to speak to your mortgage broker so they can go over every aspect of the new loan agreement with you, and ensure you’re getting the best available deal.
What are the typical eligibility conditions for mortgage cashback deals?
Eligibility criteria will vary between lenders. In general terms, you’ll need to:
- meet the application and signing deadlines for your new mortgage refinance agreement with your new lender
- meet a minimum mortgage borrowing requirement (normally at least $250,000).
Are mortgage refinance cashback bonuses worth it?
While the right refinance home loan deal can be great for your monthly cash flow, the wrong one can be more trouble than it’s worth.
Those thousands of dollars in cashback offers can sound inviting, it’s always wise to consider the deal as a whole.
Remember that different lenders attach different conditions to their home loans and those conditions often vary over time.
Entry Finance can help you
If you’re thinking about a refinance cashback offer, our Entry Finance mortgage brokers can help you sort through the detail and fine print.
Entry Finance can do this because they work for you, not the banks. Call us on 1300 468 419.
Our expert mortgage brokers are waiting for your call.