There is an increasing number of borrowers who are “exploiting” the cashback offers of some lenders.
Zippy financial director and principal broker Louisa Sanghera said many borrowers are refinancing every three to six months to qualify for cashback payments from lenders.
“These ‘cashback shoppers’ are exploiting a loophole that only requires them to stay with a particular lender for three or six months to keep the cash,” she said.
Ms Sanghera said some of these borrowers are “abusing” the services of mortgage brokers.
“They do not care about the fact that brokers spend considerable time and money on their refinance applications and will wind up with no commission whatsoever from the loan if the borrower does not stay for a minimum of a year,” she said.
“In fact, we make a loss, as it costs us $2,500 as a minimum to prepare each mortgage refinance application.”
For Ms Sanghera, borrowers need to be mindful of their refinancing decisions, as they could actually be signing up to loans that are not the best fit for their needs.
“Unfortunately, for some borrowers, the offer of supposedly ‘free’ money via cashbacks has resulted in them sometimes signing up to loans that are not the best fit for purpose over the life of their property loan,” she said.
NAB to discontinue cashback offers
NAB recently announced that it will be putting an end to its cashback offers, the second major bank to do so after CommBank.
According to NAB, new home loans written from 30 June will no longer be eligible for cashback offers.
NAB’s current cashback offer provide up to $2,000 to eligible borrowers who refinance their existing home loan to NAB.
NAB and CommBank were not explicit with their reasons for ending cashback offers but a spokesperson from the latter said the move was just in response to feedback concerning improving the simplicity of loan terms.
Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.
| Lender | Home Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Repayment type | Rate Type | Offset | Redraw | Ongoing Fees | Upfront Fees | Max LVR | Lump Sum Repayment | Extra Repayments | Split Loan Option | Tags | Features | Link | Compare | Promoted Product | Disclosure |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
5.29% p.a. | 5.33% p.a. | $2,773 | Principal & Interest | Variable | $0 | $530 | 90% |
| Promoted | Disclosure | ||||||||||
5.19% p.a. | 5.10% p.a. | $2,742 | Principal & Interest | Variable | $0 | $0 | 80% |
| Disclosure | |||||||||||
5.39% p.a. | 5.43% p.a. | $2,805 | Principal & Interest | Variable | $0 | $530 | 90% |
| Promoted | Disclosure |
-
Photo by IpekMorel on Canva.
Collections: Refinance home loans Mortgage News
Share