Are cashbacks worth it?

Some lenders may introduce cash back offers as a strategy to attract new customers. While these offers can be targeted at new purchase borrowers, lenders also target refinancing borrowers to make themselves more competitive in a saturated market.

For a borrower evaluating comparable mortgage options from different lenders, a cash back incentive on a refinance home loan could be a deciding factor. Typically, these cash back incentives are for a a limited time only, which can increase urgency in potential customers who may be looking to switch home loans.

While the quick cash is great now, you may end up paying more over time in extra interest, if the loan does not have a competitive rate. 

It’s important to consider the long-term value of your home loan. This means looking at your:

• Interest rate
• Fees
• Loan features

A higher interest could end up cancelling out the short-term gain. 

People who spend the time to constantly drive a hard bargain to negotiate with their lender, not only on rates but also on fees, could end up well ahead with a cash back deal. However, anyone with a 'set-and-forget mentality' to their mortgage might be better off on low, ongoing variable rates, like Unloan.

This article is intended to provide general information only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. Please consider seeking financial advice before making any decision based on this information.‍

Unloan is a division of Commonwealth Bank of Australia.

Applications are subject to credit approval, satisfactory security and you must have a minimum 20% equity in the property. Minimum loan amount $10,000, maximum loan amount $10,000,000, and total borrowings per customer across all Unloan loans is $10,000,000. (For purchase loans a minimum 10% equity is required - however a Lenders Mortgage Insurance (LMI) premium and higher interest rate apply. In some cases, depending on the property’s location or type, an LMI premium may also be required for LVR between 70.01% to 80%). For loans with Lenders Mortgage Insurance (LMI) the minimum loan amount is $10,000, maximum loan amount is $3,000,000 and total borrowings per customer across all Unloan loans is limited to $3,000,000).

Unloan offers a 0.01% per annum discount on the Unloan Live-In rate or Unloan Invest rate upon settlement. On each anniversary of your loan’s settlement date (or the day prior to the anniversary of your loan’s settlement date if your loan settled on 29th February and it is a leap year) the margin discount will increase by a further 0.01% per annum up to a maximum discount of 0.30% per annum. Unloan may withdraw this discount at any time. The discount is applied for each loan you have with Unloan.

*At Unloan, we do not charge any annual, application, banking, account, transaction, late or exit fees. In certain circumstances you may be required to pay a Lenders Mortgage Insurance (LMI) premium. Learn more about why this is applied and how it works. Government fees may also apply. Learn more about government fees here. Your current lender may charge an exit fee when refinancing.