Cashback Offers on Refinancing: Free Money or a Trap?

Cashback offers sound like exactly what they promise, a lender paying you to switch to them. The reality is more conditional than the headline number suggests, and for vets in particular, some of those conditions are worth understanding before you assume an offer applies to you.

What's Actually on Offer

Cashback offers for refinancing are common in the current market, typically ranging from around $1,000 up to $4,000 depending on your loan size. Some lenders tier the amount, a larger loan balance qualifies for a larger cashback.

The Conditions That Matter

Most cashback offers come with a minimum loan amount and a maximum loan to value ratio, commonly around 80%. Fall short of either and the offer simply will not apply to you.

This is where it gets specific to vets. If your original loan was structured around an LMI waiver, you may be sitting at a higher LVR than the standard 80% cap that most cashback offers require. A vet refinancing from a waiver arrangement can find themselves ineligible for a cashback offer purely because of the LVR condition, even though the loan itself might otherwise be a good fit.

There are also timing conditions. Offers usually require your application to be submitted and your loan to settle within a set window. Miss the deadline and the cashback is off the table.

Switching Isn't Free Either

Refinancing comes with its own costs, discharge fees from your current lender, application or settlement fees with the new one, and sometimes a valuation fee. A cashback offer is often designed to offset exactly these costs, which is a fair use of it. Where it becomes a problem is when the cashback gets treated as a bonus on top of switching costs that were already going to be covered anyway, rather than what it actually is, compensation for a cost you were always going to wear.

How to Actually Use a Cashback Offer

None of this means cashback offers are not worth having. If the loan itself stacks up well on rate, fees, and features, and you happen to qualify for the cashback on top, that is a genuine bonus.

The mistake is choosing a lender because of the cashback rather than because of the loan. The cashback should be the tie breaker between two loans that are already competitive, not the reason you picked one that is not.

Our Take

We check cashback offers against the full picture for every vet we work with, the rate, the fees, the eligibility conditions, and whether the numbers still make sense once the cashback washes out over a few years. For vets coming off an LMI waiver arrangement, we also check whether your current LVR position even makes you eligible before getting your hopes up. Sometimes cashback genuinely tips the decision. Sometimes it is a distraction from a better loan sitting right next to it.

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