Recent RBA rate rises have seen the refinancing market become super competitive.
With record numbers of borrowers looking for better deals, banks have had to come to the party with some tasty offers in order to win their share of the business.
About a year ago, it was common for banks to offer cash rebates of between $4000 and $6000 for borrowers who brought their loan over from a competitor.
Recent months have seen these deals wound up by a number of lenders and the average rebate available now is around the $2000 mark, but there are some offering more.
What are refinance cash rebates?
It’s simple, a bank wants your business so it will offer you a cash sum to refinance your mortgage and bring your debt, and its interest payments, over.
Aussies must like a wad of cash because it has proved an effective carrot for banks to offer.
It’s easy to understand why, when you consider that many people have realised they’re now paying a certain dollar amount a year extra since rates went up. So a cash rebate can cover a good chunk of that money, if not all of it, without you having to make other spending sacrifices.
It could also help you take care of any upcoming expenses or bills that might be causing you stress. But before you sign up, you need to make sure the deal is worth it. If the new loan doesn’t suit your needs, the short-term benefit of the rebate may disappear before you know it and it can cause you long-term pain.
How do I weigh up the benefits?
The first point of a rebate is to cover the costs of moving loans to another bank.
Expenses such as government fees for discharge of title, discharge of mortgage, title registration, costs of title searches, settlement fees and solicitor documentation fees. If you break a fixed-rate mortgage term, you will also incur early exit fees.
If you opt for a cash rebate, you need to make sure you’ve covered all those costs and are still left in the black.
Cash rebate or not, you should only refinance to a loan that saves you money or enables you to make money through its features.
The interest rates are an obvious point to consider. If your new rates will be higher, it will be very unlikely that it’s worth it. Likewise, if there are no flexible features. You want to be able to make extra repayments, have an option for an offset or redraw and be able to refinance again for a better deal or to release equity in a property the next time it suits you.
Once you get the rebate, the single best way to use it is to put it straight back into your loan either as an extra repayment or into an offset account to save you interest.
What are the best ones on the market?
Comparison site RateCity shows a number of attractive rebate deals currently out there.
As of September 2023, there were 15 lenders offering them, mostly just for owner-occupiers looking to refinance.
St George Bank was offering $2,000, as was RAMS (though first-home buyers could only access $1000).
HSBC was offering $3288, while ANZ ($2000) and Reduce Home Loans ($2000 – $10,000) had ranges of dollar amounts for borrowers who ticked certain boxes.
To get the maximum $10,000 rebate from Reduce Home Loans, for example, your loan needed to be greater than $2 million, while ANZ was offering $3000 to first-home buyers.
Bank of Queensland was also offering a $2000 rebate.
It’s important to note, of course, that all loans are subject to certain conditions and the best way to navigate through the products out there is with the help of a good mortgage broker.
Which brings us to the next point.
Reach out to Zinger Finance
Zinger Finance mortgage brokers can help you figure out whether a rebate deal will be worth your while and which options you are eligible for. They can also help you avoid hitting a financial brick wall down the track by signing up for loans that lock you in for long periods or make it too hard to access your equity.