Invest
Think twice before you go for the cashback
Incentives like rewards points or cashback offers sound appealing, but can leave borrowers up to $85,000 worse off over the life of the loan, new analysis has suggested.
Think twice before you go for the cashback
Incentives like rewards points or cashback offers sound appealing, but can leave borrowers up to $85,000 worse off over the life of the loan, new analysis has suggested.
According to financial comparison provider RateCity, weaker lending figures are driving banks to offer incentives, but these incentives can be little more than red herrings over the life of a 30-year loan.
“Don’t go choosing something as important as a home loan based on a short-term perk,” RateCity spokeswoman Sally Tindall said.
“Free overseas flights or a lump sum of cash might grab your interest, but most home loans have a 30-year term, by which time the holiday will be a distant memory.
“There are lots of specials on the table at the moment because the banks are eager for your business. Growth in home loans is slowing and that’s got the banks’ marketing departments working overdrive.”
The Commonwealth Bank is the most recent lender to launch an incentive, offering borrowers a $2,000 cashback deal on some of its loans. It follows Westpac, the Bank of Sydney, Homestar Finance, Virgin Money, UBank and Reduce Home Loans in using the tactic.
However, based on an owner-occupier principal and interest loan of $300,000, borrowers could end up paying between $690 and $85,051 more over a 30-year loan.
RateCity broke it down:
| Provider | Product | Perk | Rate | Extra cost compared with lowest rate loan over 30 yrs |
| CBA |
Wealth Package Variable
|
$2,000 cash back | 4.72% | $85,051 |
| Police Bank |
Premium home loan
|
$1,000 cashback | 4.74% | $75,848 |
| Bank of Melbourne |
Advantage Package
|
$1,500 cashback | 4.45% | $67,941 |
| Westpac |
Premier Advantage package
|
200,000 Velocity Reards points |
4.44% | $66,842 |
| St George |
Advantage package
|
$1,500 cashback | 4.42% | $66,023 |
| BankSA |
Advantage package
|
$1,500 cashback |
4.41% |
$65,384 |
| P&N Bank |
& home loan
|
$1,000 cashback | 3.99% | $27,560 |
| Northern Inland CU |
Introductory homeloan
|
Up to $1,000 cashback | 3.69% | $12,799 |
| Ubank |
Discounted rate loan
|
$1,000 cashback | 3.69% | $9,069 |
| Virgin Money |
Reward me variable loan
|
Max 630,000 Velocity Rewards points over life of loan | 3.68% | $7,039 |
| Bank of Sydney |
Expect more package
|
Package fee waived for life of loan | 3.58% | $3,378 |
| Homestar Finance |
Homestar Finance
|
$900 cashback | 3.54% | $690 |
“If you’re looking for a home loan, first make sure it is a fit for your finances. Then look for a loan with a low rate and low fees. Any cash or points offered beyond that are a bonus,” Ms Tindall told borrowers.
RELATED ARTICLES
Property
Rents Are Repricing Australia Inc: What record‑low vacancies mean for inflation, talent and strategy
Australia’s rental market has slipped into a vacancy desert, and it’s not just tenants feeling the heat. Persistently tight supply is pushing up rents, embedding services inflation and complicating ...Read more
Property
Young buyers poised for a comeback as 5% First Home Guarantee takes effect
In a move set to reshape the Australian property landscape, the government’s revamped First Home Guarantee is poised to open the doors of homeownership to a new generation of young AustraliansRead more
Property
AFG Securities waives settlement fees for first-home buyers, signalling strategic shift
In a strategic move aimed at easing the financial burden on first-home buyers, AFG Securities has announced the elimination of settlement fees on select loans, potentially saving customers up to $699Read more
Property
From trust woes to wealth: Australian agencies' secret to boosting prices
In Australia’s residential market, trust is no longer a nice-to-have—it’s a pricing variable. Persistent distrust of real estate agents is depressing vendor outcomes and inviting regulatory heat, but ...Read more
Property
Reality check for first home buyers: Affordable suburbs with 5% deposit
In a significant development for Australian first home buyers, a new property search tool from Aussie Home Loans is set to transform the way prospective homeowners approach the market. As the Federal ...Read more
Property
Trust as a performance multiplier in Australia's real estate market
In Australia’s A$10–11 trillion housing market, trust is emerging as a crucial factor that sellers and agencies can no longer afford to overlook. Traditionally viewed as a soft metric, trust is now ...Read more
Property
LJ Hooker Lake Macquarie makes a splash with Belmont buy as real estate consolidation looms
LJ Hooker Lake Macquarie’s acquisition of the Belmont office, including its rent roll, is less about shopfronts and more about balance‑sheet resilience. In a market where listings ebb and flow with ...Read more
Property
Twice the demand: the case study behind Melbourne’s first‑home buyer surge
Melbourne has quietly engineered one of Australia’s most consequential housing turnarounds, with first‑home buyer demand running at roughly double the national pace and four of the top five buyer ...Read more
Property
Rents Are Repricing Australia Inc: What record‑low vacancies mean for inflation, talent and strategy
Australia’s rental market has slipped into a vacancy desert, and it’s not just tenants feeling the heat. Persistently tight supply is pushing up rents, embedding services inflation and complicating ...Read more
Property
Young buyers poised for a comeback as 5% First Home Guarantee takes effect
In a move set to reshape the Australian property landscape, the government’s revamped First Home Guarantee is poised to open the doors of homeownership to a new generation of young AustraliansRead more
Property
AFG Securities waives settlement fees for first-home buyers, signalling strategic shift
In a strategic move aimed at easing the financial burden on first-home buyers, AFG Securities has announced the elimination of settlement fees on select loans, potentially saving customers up to $699Read more
Property
From trust woes to wealth: Australian agencies' secret to boosting prices
In Australia’s residential market, trust is no longer a nice-to-have—it’s a pricing variable. Persistent distrust of real estate agents is depressing vendor outcomes and inviting regulatory heat, but ...Read more
Property
Reality check for first home buyers: Affordable suburbs with 5% deposit
In a significant development for Australian first home buyers, a new property search tool from Aussie Home Loans is set to transform the way prospective homeowners approach the market. As the Federal ...Read more
Property
Trust as a performance multiplier in Australia's real estate market
In Australia’s A$10–11 trillion housing market, trust is emerging as a crucial factor that sellers and agencies can no longer afford to overlook. Traditionally viewed as a soft metric, trust is now ...Read more
Property
LJ Hooker Lake Macquarie makes a splash with Belmont buy as real estate consolidation looms
LJ Hooker Lake Macquarie’s acquisition of the Belmont office, including its rent roll, is less about shopfronts and more about balance‑sheet resilience. In a market where listings ebb and flow with ...Read more
Property
Twice the demand: the case study behind Melbourne’s first‑home buyer surge
Melbourne has quietly engineered one of Australia’s most consequential housing turnarounds, with first‑home buyer demand running at roughly double the national pace and four of the top five buyer ...Read more
