Bank cashbacks: What you need to know
You might have seen headlines recently about borrowers "cashing in" with bank switching deals worth up to $20,000. Sounds pretty exciting, right? Let's break down what's actually on offer and how you might benefit.
What's actually available
Banks are genuinely competing for your business right now. Cash contributions typically range from 0.8% to 1% of your total loan value, which scales with your borrowing - for example:
$300,000 loan: $2,400-$3,000 cash contribution
$500,000 loan: $4,000-$5,000 cash contribution
$800,000 loan: $6,400-$8,000 cash contribution
Larger loans: Some lenders offer contributions up to $20,000+
A real-world example
Let's say you have an $800,000 mortgage currently fixed at 6.85% with 25 years remaining on your original 30-year term. Your current repayments are around $6,000 per month.
Now imagine refinancing to a new bank offering 4.85% on a fresh 30-year term, plus a $7,700 cash contribution. Your new repayments would drop to approximately $4,200 per month - that's around $1,800 less each month, plus you get $7,700 in your pocket upfront. Even if you face a small break fee, you’ll still come out well ahead.
Yes, you're extending the loan term by 5 years, but the immediate cash flow relief of $1,800 monthly could be game-changing for many families. That's an extra $21,600 per year in your pocket.
This is a real example of a refinanced loan I assisted with recently, where the clients were struggling to put food on the table due to cost of living pressures.
Why now is a great time to consider switching
These cash contributions are making bank switching incredibly competitive. When you combine a decent contribution with a better interest rate, the numbers can really stack up. Even a small rate improvement of 0.1% or 0.2% becomes much more attractive when the cash contribution covers your legal costs and switching fees.
The aefinancing advantage
If you already have a mortgage, switching banks can be particularly rewarding. The cash contribution often covers all refinancing costs (legal fees, valuation costs, etc.) and leaves you with money left over. Even if rates are similar across banks, you're essentially getting paid to switch.
What you need to know
These offers come with standard requirements:
Usually for new customers
Minimum loan amounts (varies by lender)
Commitment periods (often 3 years)
Some enhanced offers for first home buyers
Making it work
Look at the complete picture. Cash contributions can help with moving costs, legal fees, or home improvements. But also consider:
Interest rate competitiveness
Service quality
Future flexibility
Ongoing fees
Break fees with your existing lender, if you have a loan locked in on a fixed rate
The reality check
Not every switch makes sense. Break fees from your current lender, rate differences, and your personal circumstances all matter. The key is running the numbers properly rather than chasing the biggest headline figure.
Your next steps
If you're curious about what's available - whether buying, building, or refinancing - there might be opportunities worth exploring. Every situation is different - just reach out!
This is not personalised financial advice, and nothing mentioned here should be acted upon without first seeking personalised financial advice from a suitably qualified professional.
