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There is an increasing number of borrowers who are “exploiting” the cashback offers of some lenders.

Zippy financial director and principal broker Louisa Sanghera said many borrowers are refinancing every three to six months to qualify for cashback payments from lenders.

“These ‘cashback shoppers’ are exploiting a loophole that only requires them to stay with a particular lender for three or six months to keep the cash,” she said.

Ms Sanghera said some of these borrowers are “abusing” the services of mortgage brokers.

“They do not care about the fact that brokers spend considerable time and money on their refinance applications and will wind up with no commission whatsoever from the loan if the borrower does not stay for a minimum of a year,” she said.

“In fact, we make a loss, as it costs us $2,500 as a minimum to prepare each mortgage refinance application.”

For Ms Sanghera, borrowers need to be mindful of their refinancing decisions, as they could actually be signing up to loans that are not the best fit for their needs.

“Unfortunately, for some borrowers, the offer of supposedly ‘free’ money via cashbacks has resulted in them sometimes signing up to loans that are not the best fit for purpose over the life of their property loan,” she said.

NAB to discontinue cashback offers

NAB recently announced that it will be putting an end to its cashback offers, the second major bank to do so after CommBank.

According to NAB, new home loans written from 30 June will no longer be eligible for cashback offers.  

NAB’s current cashback offer provide up to $2,000 to eligible borrowers who refinance their existing home loan to NAB.

NAB and CommBank were not explicit with their reasons for ending cashback offers but a spokesperson from the latter said the move was just in response to feedback concerning improving the simplicity of loan terms.

Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.

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LenderHome LoanInterest Rate Comparison Rate* Monthly Repayment Repayment type Rate Type Offset Redraw Ongoing Fees Upfront Fees Max LVR Lump Sum Repayment Additional Repayments Split Loan Option TagsFeaturesLinkComparePromoted ProductDisclosure
6.04% p.a.
6.08% p.a.
$3,011
Principal & Interest
Variable
$0
$530
90%
4.6 STAR CUSTOMER RATINGS
  • Available for purchase or refinance, min10% deposit needed to qualify.
  • No application, ongoing monthly or annual fees.
  • Dedicated loan specialist throughout the loan application.
 Disclosure
5.99% p.a.
5.90% p.a.
$2,995
Principal & Interest
Variable
$0
$0
80%
  • A low-rate variable home loan from a 100% online lender.
  • Backed by the Commonwealth Bank.
 Disclosure
6.14% p.a.
6.16% p.a.
$3,043
Principal & Interest
Variable
$0
$350
60%
Important Information and Comparison Rate Warning

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of .

Important Information and Comparison Rate Warning

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Photo by IpekMorel on Canva.

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