Which lenders have the most attractive offers for refinancers?
A growing number of lenders in Australia are offering incentives such as cashback payments and rewards points to borrowers who refinance their home loans, as competition in the mortgage market intensifies.
According to financial comparison site Mozo, the largest cashback currently available is $4,000 to customers who refinance qualifying loans. While less common, some lenders are also providing rewards such as Qantas Points, with Qantas Money offering 100,000 points per year for the life of the loan to eligible refinancers.
Among the latest offers, Regional Australia Bank is providing up to $4,000 cashback for refinancing loans of $750,000 or more, and $3,000 for loans between $500,000 and $749,999, subject to terms and conditions. BankVic is offering $4,000 cashback on new or refinanced loans of at least $350,000, but this is limited to police force members with a loan-to-value ratio (LVR) below 80%. ME Bank has a $3,000 cashback for refinancers with loans over $700,000, also requiring an LVR under 80% and settlement within 120 days.
ANZ and ANZ Plus are both offering $2,000 cashback for refinancing loans of $250,000 or more, with eligibility criteria including an LVR below 80% and settlement within 120 days. Newcastle Permanent provides $2,000 cashback for loans between $250,000 and $499,999, and $3,000 for loans of $500,000 or more, again with an LVR requirement of less than 80%.
A cashback offer is a lump sum paid by the lender to borrowers who switch their home loan to that lender. According to the Mortgage Choice report, Australians are becoming more optimistic and keen to refinance as home loan interest rates begin to ease following the Reserve Bank of Australia (RBA)’s interest rate cuts earlier this year.
“While these cashback offers are great, it’s important to not just focus on the offers,” said Jasmine Gearie (pictured right), senior money writer at Mozo. “You’ll also want to look for competitive interest rates too, especially since larger rates can make borrowers pay increasingly larger repayments.
“A lot of refinancers will find themselves comparing their current repayments to what they could get with a refinanced home loan with a cashback offer and deciding the switch will put them in a better position. Plus, the cash you get is yours to do with as you please – you can put it in your offset account, savings, home reno, or even just a holiday.”
To qualify for a cashback offer, borrowers typically need to meet certain criteria, including a minimum loan amount – often $250,000 or higher – and an LVR at or below 80%. Lenders may also require a good credit score and applications must usually be submitted within a set promotional period.
Borrowers considering refinancing are advised to look beyond cashback offers and assess other features such as upfront and ongoing fees, as well as the ability to make extra repayments without penalty.
“Another great feature to look for when refinancing your home loan with a cashback offer is that you can make free extra repayments,” Gearie said. “Making free extra repayments is a great way of lowering the interest you pay on your loan and can reduce the length of it over time. And who’s to say you can’t grab a great rate as well, along with all these great features and a cashback deal while you’re at it?”
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