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Borrow

Big bank cashback offers trapping new borrowers

By Cameron Micallef · September 19 2019
Reading:
egg

Borrow

Big bank cashback offers trapping new borrowers

By Cameron Micallef
September 19 2019
Reading:
egg
Kirsty Lamont

Big bank cashback offers trapping new borrowers

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By Cameron Micallef · September 19 2019
Reading:
egg
Kirsty Lamont

Despite offering investors up to $2,000 cashback on new home loans, big bank schemes to lure customers are actually costing these individuals nearly $40,000 by the end of their loan’s life.

The analysis, from comparison site Mozo, has found seven $2,000 cashback offers in the market from lenders including Westpac, St.George, CommBank and NAB, but for loans with interest rates that are up to 64 basis points higher than their competitors. 

According to Mozo, this means that when the banks’ $2,000 cashback offers are factored in to monthly repayments, any benefit would disappear in the first 18 months on a $300,000 loan. 

The savings provided by the cashback offer on a $1,000,000 loan would dry up just six months in. 

Director of Mozo Kirsty Lamont has used the analysis as a warning to investors not to be fooled by cashback offers.

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“Don’t believe the hype when it comes to home loan cashback offers.”

She noted that the best option “is always to compare what’s on offer and go with the most competitive rate”. 

Explaining that even the cheapest options available from the traditional banks are still 31 basis points higher than online banks, the director indicated that it’s in effect, meaning consumers pay more.

“When it comes to variable interest rates, the big banks are still a long way off being your best option,” Ms Lamont reiterated. 

“Home loans are a long-term commitment, and if you set and forget your loan after banking a cashback offer, you could be trapping yourself with a poor interest rate and higher monthly repayments,” she concluded.

Big bank cashback offers trapping new borrowers
Kirsty Lamont
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About the author

Cameron is a journalist for Momentum Media's nestegg. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leveraging their insights to grow your portfolio.

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About the author

Cameron is a journalist for Momentum Media's nestegg. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leveraging their insights to grow your portfolio.

Join The Nest Egg community

We Translate Complicated Financial Jargon Into Easy-To-Understand Information For Australians

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