21 lenders offering cash back home loans at rates below 2%

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Lenders are offering up to $ 5,000 cash back on mortgage rates below 2%, in an effort to gain new customers.

New analysis from RateCity.com.au shows 25 lenders are offering repayment deals – 21 of those lenders are also offering at least one rate below 2% for homeowner refinancing, in addition to repayment.

Analysis of the RateCity.com.au database:

  • 25 lenders offer cashback offers.
  • 21 of these lenders offer cash back on at least a rate of less than 2% for homeowners.
  • Cash back amounts range from $ 1,000 to $ 5,000.
  • Most cashbacks are reserved for refinancers.
  • The big four banks offer cashback offers (ANZ only offers cashback through a broker).

With refinancing hitting an all-time high in June, cash back rebates are a popular benefit offered by lenders to attract new customers. The latest figures from the ABS loan indicator show that $ 151 billion in home loans have been refinanced in the past 12 months.

Sally Tindall, Research Director at RateCity.com.au, said: “A low ongoing rate was used to trump a one-time benefit like cash back almost every time, but banks now offer increasingly both low rates and cash back offers.

“Cashback offers can potentially work in a person’s favor if they are committed to finding the best deals and refinancing regularly. However, anyone who doesn’t look past the allure of instant cash could potentially shoot themselves in the foot if they’re not careful, ”she said.

“It all depends on your personal circumstances, including the type and amount of your loan, the rate you are spending, any charges, and whether you are likely to refinance regularly.

“If you’re considering taking out a cash back offer, do the math to make sure you’ll end up ahead for the lowest rates available,” she said.

How cashback offers stack up

RateCity.com.au compared the special cashback offers to the lowest rate options on the market, based on a typical refinancer (see full assumptions at the end).

Fixed rates

The lowest 2-year fixed rate in the market is 1.79%, however, on an average mortgage of $ 500,000, 17 lenders are offering cheaper 2-year deals over the term of the fixed rate when the discount in cash, interest charges and fees are included.

For example, if the average variable rate customer refinances to the lowest 2-year fixed rate in the market (Greater Bank, 1.79%), they could potentially save up to $ 12,505 in the first two years. However, if they opted for the lowest 2-year fixed rate loan with cash back (ING, 1.84%), they could save $ 14,200, or $ 1,695 more.

Warning: If a fixed rate loan is applied at the bank’s rate of return, which is usually much higher, a person’s savings may start to run out.

Refinance of potential savings to the lowest 2-year fixed rate loan – Loan balance of $ 500,000

Rate Cash back Savings after 2 years
Average existing customer

3.07%

$ 0

Lowest rate over 2 years – Grande Banque

1.79%

$ 0

$ 12,505

Lowest rate over 2 years with cashback – ING

1.84%

$ 3,000

$ 14,200

Source: RateCity.com.au. Notes: Average variable rate for existing customers is from RBA, calculations are based on an owner-occupier paying principal and interest with $ 500,000 due and 25 years remaining. Savings calculations are interest paid, plus switching fees and ongoing charges, minus any cash back.

RateCity tip: To avoid switching to a high variable rate of return, set a reminder a few months before the fixed rate ends to look for a new deal.

Variable rates

It’s a different story when comparing the cashback offers on variable loans. After only two years, only two cashback operations (another lender) are required against the lowest variable rate in the market. After 3 years, none of them trumps the current lowest rate (assuming those rates stay the same).

For example, analysis from RateCity.com.au shows that if the average refinancer were to switch to the lowest floating rate in the market (Reduce Home Loans, 1.77%), they could save $ 11,710 in two years. If they opted for HSBC, which offers the lowest variable rate with cash back instead, they could save $ 102 Following in the first two years, even if the rate is 0.42 percent higher.

Lower Variable Rate Refinancing Potential Savings – Loan Balance of $ 500,000

Cash back Rate Savings over 2 years Savings over 3 years
RBA variable rate in progress

3.07%

Lowest Variable – Reduce

$ 0

1.77%

$ 11,710

$ 18,269

Lowest variable with cashback – HSBC

$ 3,288

2.19%

$ 11,812

$ 16,395

Before refinancing for a cashback transaction – check:

  • Is the interest rate competitive? The lowest variable is 1.77% and the lowest 2-year fixed variable is 1.79%.
  • Read the general conditions carefully. Make sure you are eligible for cashback.
  • Are the fees high? Ask the new lender to waive it if they are.
  • Does the loan offer the flexibility you need? This may include a clearing account, the ability to make additional refunds.
  • Are you able to refinance? This usually includes having a stable job, owning at least 20% of your home, and not currently receiving a fixed rate, as break fees may apply.
  • Can you put the cash back bonus in your mortgage? Additional repayments help lower your interest costs for years to come.
  • Refinance regularly: Don’t fix and forget about your loan, especially if you have a fixed loan, as the potentially high repayment rates can quickly eat into your savings.

Complete list of special mortgage loan offers with repayment on RateCity.com.au

Lender Cash back Fixed 2-year low Lowest variable Available for
ING

$ 3,000

1.84%

2.45%

Refinance
HSBC

$ 3,288

1.88%

2.19%

Refinance
Westpac

$ 3,000

1.89%

2.19% for 2 years then 2.69%

Refinance
Saint-George Bank

$ 3,000

1.89%

2.44%

Refinance
Suncorp

$ 3,000

1.89%

2.44%

Refinance
Bank of Melbourne

$ 3,000

1.89%

2.44%

Refinance
ME Bank

$ 3,000

1.89%

2.33%

Refinance
Credit union of choice

$ 3,000

1.89%

2.49%

Refinance
Bankwest

$ 2,000

1.89%

2.99%

Refinance
Newcastle Permanent

$ 2,000

1.89%

2.59%

Refinance
Great south shore

up to $ 3,000

1.89%

2.49%

Refinance
86,400

$ 2,000

1.89%

2.39%

Refinance
ANZ (via broker)

$ 3,000

1.94%

2.72%

Refinance
Virgin money

$ 3,000

1.98%

2.39%

Refinance
ABC

$ 2,000

1.99%

2.69%

Refinance
bcu

up to $ 5,000

1.99%

2.44%

New loans and refinancing
RAMS

$ 4000

1.99%

2.44%

Refinance
Queensland Bank

$ 3,000

1.99%

2.49%

Refinance
Bank SA

$ 3,000

1.99%

2.49%

Refinance
NAB

$ 2,000

1.99%

2.69%

Refinance
Reduce home loans

various

1.99%

New loans and refinancing
MyState Bank

$ 3,000

2.09%

2.29%

Refinance
Vic Bank

$ 1,500

2.19% for 3 years then 2.74%

New loans and refinancing
WLTH

$ 1,000

2.29%

Refinance
Credit Union SA

$ 2,500

2.59%

2.59%

New loans and refinancing

Notes: The rates listed above are the lowest mortgage rates advertised for homeowners paying principal and interest eligible for the repayment offer. Note that some lenders do not offer repayments on their lowest rates, including Reduce Home Loans and Credit Union SA. Suncorp Cash Back is only available on loans over $ 750,000, Credit Union SA offers up to $ 5,000 to first-time homebuyers purchasing mortgage insurance from lenders, bcu offers 0.75% Of the loan up to $ 5,000, Great Southern Bank offers a separate $ 2,000 first home offer to the buyer, with the funds added to the deposit instead of a cash back at the time of settlement and is only offered to any customer taking out a loan under the Federal Government’s First Home Loan Deposit Program. Reducing home loans offers cash back of between $ 1,000 and $ 10,000, depending on the size of the loan. Westpac rates are for loan to value ratios of 70% or less. The WLTH cashback is reserved for investors.


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