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Should I Choose A Loan for The Cashback Offer?

18th Jun, 2021 | First Home Buyer, Investor, Refinance

In this article:
Many lenders are offering cashbacks for refinances right now. Should you take the deal and get some money in your pocket?

The home loan market is competitive, and many lenders are fighting for your home loan dollar. Offers come thick and fast across the board, from big banks to credit unions, and the cashback offer is the latest way they’re trying to lure you from their competitors. But it’s crucial that you do your homework about whether the entire package represents a better deal for you.

Here are some things to consider if you’re tempted by the prospect of extra money in your pocket.

What’s the interest rate?

For many people, an extra few thousand dollars injected into the household budget sounds pretty good. But if you’re not choosing a loan with a competitive interest rate as well – you might be paying much more than this in the long run with interest charges over the term of your loan. You might find a loan with a cheaper interest rate and lower fees (but no cashback) that will save you much more over the life of your loan.

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Get some help to calculate the total amount you’ll pay over the loan term. You’ll need information like the cashback amount, interest rate, establishment fees and loan service fees. You could be surprised at the difference between lenders.

Terms and Conditions

There will often be terms and conditions on cashback offers, so read the fine print before signing on the dotted line.

Some of these include.

  • Minimum loan amount
  • Application and settlement within a specific time frame
  • Specific loan types may only be available with the offer
  • The lender may require you to open a bank account with them to receive the cashback offer
  • You may need to sign up for their home loan package, which carries an annual fee
  • You may have to put up a bigger deposit to be eligible.
  • You may be required to keep your loan for a specific period.

The cashback value may depend on how much you’re borrowing, and you might not be eligible if your loan amount is less than $250,000.

Lenders often have an expiry date on offers like these, but take your time and make a decision after considering all the factors.

Features and benefits

There are many ways to determine if a home loan is right for you. Features and benefits are a great way to start. It’s essential to assess each loan and its suitability for your needs. There’s no point in accepting a cashback offer if the loan type won’t meet your needs now and into the future.

Ask yourself:

Do you need flexibility with repayments?

Are you looking for a fixed or variable rate?

Do you need redraw or offset options?

Weigh up your options

It’s easy to get excited about an unexpected cash injection, especially when you have a mortgage to pay. Let our Yellow Brick Road mortgage brokers help you work out whether a cashback offer is right for you or if there’s a better option out there for your home loan needs.