What Are Cashback Offers When You Refinance?
When you refinance your home loan, many lenders offer cashback incentives to attract borrowers switching from their current lender. These offers can range from several hundred to several thousand dollars, paid directly to you once your refinance application settles. For Craigieburn homeowners looking to switch their mortgage, understanding how cashback refinancing works could mean significant savings alongside other benefits like accessing a lower interest rate or unlocking equity.
A cashback offer is typically a lump sum payment that the new lender provides as an incentive for refinancing your mortgage with them. While the cashback amount varies between lenders, it's not uncommon to see offers between $2,000 and $4,000, depending on your loan amount and the lender's current promotions.
Why Refinance Beyond the Cashback?
While cashback offers are attractive, they shouldn't be the only reason to consider mortgage refinancing. A comprehensive approach to refinancing looks at multiple factors:
- Lower interest rate: Moving to a lender offering a potentially lower rate could save you thousands over the life of your loan
- Release equity: Access equity in your property for renovations, investment opportunities, or other financial goals
- Improved loan features: Gain access to refinance offset account options or refinance redraw facilities that weren't available with your current lender
- Consolidate into mortgage: Combine high-interest debts into your home loan to improve cashflow and reduce loan costs
- Switch from fixed to variable: If your fixed rate period ending is approaching, refinancing gives you the opportunity to switch to variable or lock in rate with another fixed term
When Should Craigieburn Homeowners Consider Refinancing?
Timing plays a crucial role in maximising the benefits of home loan refinance. Here are key situations when refinancing makes sense:
Coming Off Fixed Rate: If you're stuck on high rate after your fixed rate expiry, now is the time for a loan review. Many borrowers find their interest rate jumps significantly when reverting to their lender's standard variable rate.
Paying Too Much Interest: If you've been with the same lender for several years, there's a good chance better rate available in the market. Lenders often reserve their most competitive offers for new customers.
Need to Access Equity: Whether you're looking to release equity to buy the next property or fund home improvements, a cash out refinance allows you to tap into your property's increased value.
Changed Financial Circumstances: Improved income or credit score might qualify you for more favourable terms than when you originally secured your home loan.
How Much Could You Save?
Let's look at a practical example for a Craigieburn household. Consider a mortgage with a $500,000 loan amount:
- Current variable interest rate: 6.50%
- New refinance interest rate: 6.00%
- Monthly savings: Approximately $150
- Annual savings: Around $1,800
- Cashback offer: $3,000
Over a five-year period, this scenario could mean savings exceeding $12,000, plus the immediate cashback. These figures demonstrate why taking action on your mortgage refinancing could be one of the most financially rewarding decisions you make.
Understanding the Refinance Process
The refinance application doesn't need to be overwhelming when you know what to expect:
- Home Loan Health Check: Start with a loan health check to assess your current situation and identify opportunities
- Compare Refinance Rates: Review current refinance rates across multiple lenders, considering both fixed interest rate and variable interest rate options
- Property Valuation: Your new lender will arrange a property valuation to confirm your home's current value and calculate available equity
- Application Submission: Provide documentation including income verification, identification, and existing loan details
- Settlement: Once approved, your new lender pays out your existing loan, and you receive any cashback within the agreed timeframe
Most refinance applications take between 4-6 weeks to complete, though this can vary depending on your circumstances and the lender's processes.
What About Refinancing Costs?
While cashback offers are appealing, consider the costs involved in refinancing:
- Discharge fees from your current lender (typically $300-$500)
- Application fees with the new lender (often waived during promotions)
- Property valuation costs (sometimes covered by the lender)
- Potential break costs if coming off fixed rate early
A thorough loan review will help determine whether the savings and cashback outweigh these costs. In most cases, especially for larger loan amounts, the long-term benefits far exceed the upfront expenses.
Making the Right Choice for Your Situation
Every Craigieburn homeowner's circumstances are unique. When considering whether to refinance home loan with a cashback offer, think about:
- Your remaining loan term and how long you plan to stay in your property
- Whether you want to switch to fixed or switch to variable rates
- Your goals for releasing equity in your property
- The total cost savings beyond just the cashback amount
- Access to features like offset accounts that could further reduce loan costs
For those looking to move mortgage to a new lender, it's worth exploring all available options. Our team at Step Ahead Finance works with multiple lenders across Australia, giving Craigieburn residents access to a wide range of refinancing solutions, including those with attractive cashback offers.
Don't let your mortgage hold you back from financial progress. Whether you're stuck on high rate after your fixed rate expiry or simply want to explore what's available, taking action now could unlock significant savings and improved loan features.
Call one of our team or book an appointment at a time that works for you. We'll conduct a comprehensive assessment of your current situation and identify opportunities to save money refinancing while accessing the cashback offers you deserve.
