Everyone loves a good deal. There are actual studies about how deal-hunting makes consumers feel smart.
When it comes to thousands-of-dollars mortgages, it wouldn’t be any different.
If you have been thinking about refinancing your home loan, you have probably come across a few refinancing cashback deals in your search.
What are refinance cashback deals?
A refinance cashback deal is a marketing incentive some lenders offer borrowers when they choose to refinance their existing home loan with them.
Depending on the lender, cashback amounts will vary from $2,000 to $4,000.
Borrowers usually receive the cashback offer in the form of cash payment, but some lenders might offer gift cards or other perks instead.
Is everyone eligible for a refinance cashback?
There are certain requirements that you’ll need to meet to be eligible for a cashback deal. Each lender will have its own terms and conditions when it comes to cashback offers.
Here are some common requirements lenders will have:
- Maximum loan to value ratio (LVR) of 80%. That means the amount you need to borrow for the new loan cannot exceed 80%.
- Minimum lending amount (typically $250,000).
- Have the application sent by a specific date.
- Have the loan settled by a certain date.
Are cashback deals worth it?
They are certainly worth it if you find the right loan for you.
Sure, saving money and finding deals clearly drives many people, but there are other important things everyone also needs to consider when it comes to refinancing.
Sometimes the new loan won’t have some handy features that could save you money in the long run. For example:
- Offset accounts: An offset account is a separate account that lets you use the balance to offset the principal on which your interest is calculated. Simply having your pay packet deposited into this account can take time off your loan.
- Flexible payments: Paying some more money into the loan if you have it is a great way to shorten your loan and save more in the long run.
- Redraw options: This option lets you easily access any extra funds you’ve deposited into your loan.
- Flexible rates: Some loans allow you to split your repayments into fixed-rate and variable-rate components. This sort of loan lets you enjoy the benefits of an interest rate drop and also protects you from being fully affected if they rise.
It’s important to keep in mind that lenders will have their own terms and conditions, offering some or none of these features.
Refinancing shouldn’t be just about finding the best cashback deal or even the best rate for that matter; it should be about finding the right loan for current needs and circumstances. Saving money in the process is always a plus!
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