Compare home loan cashback offers

Mortgage lenders offer cashback deals as incentives to attract new home loan customers. These deals typically range between $1,000 and $5,000, though some lenders offer more.

Lenders often promote these deals as limited time offers to encourage borrowers to choose them over others in a highly competitive mortgage market. This situation can be a win-win, provided the customer selects the right home loan for their situation. The lender gains a new customer, while the customer receives cash to help relieve some of their budgetary pressure, such as helping to cover the cost of home loan fees and charges, conveyancing fees, or moving costs.

Cashback deals are generally available to owner-occupiers and refinancers. While cashback home loan offers are being mostly targeted towards Australians who are refinancing their home loan, a few cashback deals are available to first home buyers as well.

The most significant benefit of a cashback home loan deal is that it can help make up some of the upfront costs when applying for a home loan or refinancing, such as upfront and discharge fees.

A cashback deal may even help pay for additional home expenses, such as lenders mortgage insurance (LMI), stamp duty, moving costs or renovations. Cashback may also offer other benefits, depending on your personal financial situation and how you choose to spend the funds.

Benefits of cashback payments:

• Pay for upfront costs
• Pay for stamp duty
• Pay for lenders mortgage insurance LMI)
• Pay for moving costs
• Pay for renovations

While having extra cash in your back pocket can be an exciting prospect, make sure you do your research and don’t choose your home loan based solely on the cashback offer.

There is more to a home loan than the perks it offers. These may include features like an offset account or redraw facility, or an introductory low interest rate that reverts to a higher ongoing rate after a year or two.

If a lender is offering a big cashback deal, but also charging a high ongoing variable rate or annual fee, the cashback deal may not provide as much value over the long term. It may prove less expensive to choose a low-rate or low-fee home loan instead, as the savings from refinancing to a low interest rate could equal or even exceed the value of a cashback offer in just a few years.

It may not be as easy to find and compare cashback home loans as other types of home loan deals. Several major banks have begun pulling their cashback deals from the market, due in part to record refinancing activity increasing competition between mortgage lenders. With fewer cashback home loan options to choose from, it may be harder to find a mortgage that also offers the right interest rate, fees, features, and benefits to suit your needs. 

If a cashback deal is a priority for your home loan, consider the interest rate and fees being charged as well when comparing your mortgage options. Use a Home Loan Repayment Calculator to calculate your potential payments (weekly, fortnightly or monthly) with different cashback home loans and discover which one may best suit your budget and financial situation.

Currently, the majority of home loan cashback offers are for refinancing purposes only. While there are still some available for first home buyers, refinancers are being offered the lion’s share.

This is because the home loan market has been coming out of a period of historically low interest rates. After 12 cash rate hikes since April 2022, home loan customers ome loan customers are refinancing at record levels to avoid rising interest rates and to reduce their home loan repayments. Mortgage lenders offer competitive cashback deals to refinancers to encourage these customers onto their books, though a few have begun slashing or pulling the plug on these cashback deals.

Plus, the cost of refinancing can be a barrier for some home loan customers. The cost of break fees for fixed rate home loans, application fees with a new lender, and other expenses can climb into hundreds or even thousands of dollars. Offering a refinance cashback deal that may help cover these switching costs is one way lenders can compete for business from refinancers.  

Besides the cashback option, other special home loan deals a lender may offer owner-occupiers and investors include:

• Discounted interest rates
• Waived annual fees
• Waived LMI

Special offers like these may be especially appealing to first time buyers and younger Australians, who are more likely to be on lower incomes or have less savings available than some other buyers. Perks like these can help homeowners keep costs down after putting their savings into a home loan deposit, while investors may be able to offset some of their upfront costs and maintain a higher rate of return.

Keep in mind that there is more to a home loan than the perks being offered. Additionally, home loans with bonus features may have specific eligibility criteria, terms and conditions to fulfil, which may not be suitable to every borrower. It’s worth comparing a range of factors about a home loan before you sign on the dotted line. 

Use comparison tables

When searching for your first or next home loan, the comparison tables found on RateCity can help you compare the key factors of different mortgage options.

Check the interest rates

Carefully compare the interest rates of any home loans offering cashback deals to ensure the cashback value is not outweighed by the cost of high interest charges. 

Look at the fees

Your home loan may charge upfront fees and ongoing fees as standard, and if you refinance from a fixed rate loan too early, you may also have to pay a break fee. It’s worth looking at a home loan’s comparison rate, which combines its interest charges and standard fees into a single percentage. While comparison rates are all based on a $150,000 principal and interest loan paid over 25 years for consistency, they may still help to indicate the loan’s ‘true’ overall cost, and how this may affect the cashback’s value. 

Consider the features

Lenders also may offer some helpful features, such as an offset account, a redraw facility or unlimited additional repayments without charge. If flexibility is important to you, it may be worth comparing home loans that offer these features in addition to the cashback.

Look at the lender

It's not enough to love the cashback you're being offered - you need to like the lender as well. Consider their customer service, fintech innovation and branch access, especially if you rely on face-to-face customer service. 

Calculate the value

Some mortgage lenders may charge a higher interest rate or greater fees for cashback loans than for a ‘no-frills’ more basic home loan option. You may want to calculate whether the benefit of cashback outweighs any of these additional costs. 

A Home Loan Repayment Calculator may come in handy for comparing the cashback amount to the potential savings offered by a lower interest rate, and working out which option may offer you the most value.

Compare Real Time Ratings^TM

Finally, to help you narrow down your shortlist of options, you may want to look at the Real Time Ratings^TM score of each home loan product. Real Time Ratings^TM is RateCity’s rating system that ranks home loans based on your individual requirements. Each product is given a score out of five, based on loan costs and flexibility. Unlike other comparison pages which rank their products once or twice a year, Real Time Ratings^TM results are updated regularly to help them stay as accurate as possible