Getting “cashback” on your home loan - the basics
Disclaimer: The below guide is general in nature and do seek individual financial advice to see how this applies to your situation. Our experienced advisers are on hand to help at no cost to you (T’s and C’s apply)
What is Cashback?
Cashback, (also known as a cash incentive or cash contribution), is money that a bank will give you to incentivise you to move your loan to them over another lender.
Why do they offer this?
Banks do it for 2 reasons.
To attract customers to the bank
To make sure you stay with that bank for a reasonable amount of time.
Attached to cashback is a “clawback period”. Put simply, this means that you will need to keep your mortgage with the bank that has offered you cashback for an agreed minimum period of time.
This is usually about 3-4 years but varies between banks. If you do not stay with the bank that has paid you cashback for the minimum clawback period, then you must repay some or all of the cashback to that bank. The terms and conditions on this vary from lender to lender.
After your clawback period has ended, you are able to switch banks without having to repay the cashback. This can be a good time to discuss refinancing with your mortgage adviser.
When do I get this money?
This is paid into your bank account on the settlement date of your loan at the new bank. Sometimes there is a delay of a few days due to internet banking processing times.
How much can I get?
This is a great question for your adviser as there are lots of factors that influence how much your cashback is likely to be. Often it will be a few thousand dollars, but there are lots of variables, such as:
How much deposit we are putting down - 20% deposit loans generally attract more cashback than lower deposit loans.
Which lender we choose
Any special offers from the bank, depending on your lending profile - e.g., First Home Buyer specials. Your adviser will be aware of these, and not all are advertised.
How much lending we are taking out.
What can I spend it on?
Anything you like! It’s cash in your account to spend as you wish, (just don’t forget the clawback period!)
I already have a home loan, can I get cashback again?
This can be possible and usually happens in one of 2 ways:
1 - Further cashback when you refix your rates.
This is usually only offered if you are out of your clawback period and is usually a much lower amount than what offered when first taking out the loan. Not all banks offer this, and the ones that do tend to be on a case by case basis.
2 - By Refinancing
If you have had your home loan for 3-4 years, it can be worth talking to your adviser around refinancing, as this could get you another round of cashback. See our article on the Top 5 Things You Need to Know About Refinancing.
Are there times I am less likely to get cashback?
Generally speaking, top ups on existing loans are less likely to get cashback, but it has happened occasionally. There is no harm in asking!
Some lenders will not give cashback on certain types of loans, like revolving credit or offset. Speak to your adviser to find out more.
