Are cashbacks worth it?
We break down how home loan cashback offers work, what to look out for, and whether they’re worth it based on your situation.
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.
