Key takeaways
- A cashback is a one-off payment; the interest rate applies for the life of the loan.
- A higher rate attached to the cash can cost far more than the cashback returns.
- Watch for clawbacks, minimum loan sizes, LVR limits and switching costs.
- Judge the rate and fees first — use the cashback only to break a tie.
Lenders offer cashbacks for one reason: to win your loan. That doesn’t make them a bad deal — it makes them a deal you have to read carefully. The mistake is treating the headline cash as the prize. The real prize is a low rate over many years; the cashback is a bonus, and only if the rate behind it stacks up.
How they work
You refinance to a new lender and, after settlement, they credit you a lump sum — commonly a few thousand dollars. There are usually strings: a minimum loan size, a maximum LVR, eligible loan types, and sometimes a clawback if you leave again within a set period. None of that is sinister; it just means the offer has to be weighed as a whole.
The maths that matters
Compare the total cost over the years you’ll keep the loan, not the cash on day one. A $3,000 cashback looks great — until a rate that’s a fraction higher costs you more than that over three or four years on a large balance. Run the rate first; if two loans are genuinely close on rate and fees, then the cashback is a legitimate reason to pick one.
Factor in the break costs and switching fees of leaving your current loan. A cashback that barely covers those isn’t really a windfall — it’s just paying you back your own switching costs while you commit to a new rate.
When a cashback is a genuine win
When the new loan’s rate and fees are already among the best available, the cashback is pure upside — and can neatly cover the cost of switching. That’s the deal worth taking. The one to avoid is a mediocre rate dressed up with cash. Our when not to refinance guide covers the other traps around switching.
Broker Insight. A cashback is only a win if the rate behind it stacks up. We compare the whole deal over the years you’ll hold the loan — not just the cheque on day one.
See past the headline number
We compare the whole market on rate, fees and cashback — so you take the offer that actually leaves you ahead, not just the biggest cheque. Free, no obligation.
Book your free game plan callFrequently asked questions
Are refinance cashback offers worth it?
They can be — but only when the loan’s ongoing rate and fees are competitive on their own. A cashback is a one-off payment; the interest rate applies for years. If a lender offers cash but charges a higher rate, the extra interest can quietly cost you more than the cashback ever gave back. Judge the rate first and treat the cashback as a tie-breaker between otherwise similar loans.
How do refinance cashbacks work?
A lender pays you a lump sum — often a few thousand dollars — for refinancing your loan to them, usually credited after settlement. They’re a marketing tool to win your business. There are normally conditions: a minimum loan size, a minimum LVR, and sometimes a clawback if you leave within a set period. Always read the fine print alongside the rate.
What’s the catch with cashback deals?
The most common catch is a higher ongoing interest rate that outweighs the cash over time. Others include clawbacks if you refinance away again soon, offers limited to certain loan types or LVRs, and switching costs (discharge and application fees) that eat into the benefit. A cashback is only a true win when the underlying loan is genuinely competitive.
This guide is general information only and does not take your personal circumstances into account. It is not financial or credit advice. Government schemes, lender policies, rates and tax rules change over time and eligibility criteria apply. Speak with us for advice tailored to your situation.