What mortgage cashback actually is
When you take out a new mortgage, whether that's a first home loan or refinancing an existing one to a new bank, many lenders will pay you a lump sum after settlement as an incentive. It's not a discount on your loan; It's cash paid directly to you (or, if you use MyRateCheck, we model applying it straight against your principal instead, which compounds into a much bigger saving over time).
Lenders do this because winning you as a customer is worth more to them over the life of the relationship than the upfront cost of the cashback. It's a customer-acquisition cost, not a gift.
How much cashback is typically on offer
Cashback offers in the current market generally range from about 0.7% to 1% of your loan balance. First-home buyers are sometimes offered flat dollar amounts instead of a percentage. Larger, "cleaner" loans (straightforward income, good LVR, no complications) tend to attract the better end of that range, since they're cheaper for the bank to process and lower risk.
The clawback catch
This is the part that trips people up. Cashback isn't free money with no strings. Almost every bank attaches a clawback period, typically two to four years. If you refinance away to another lender or repay the loan in full within that window (for example, because you sell the property), the bank can claw back some or all of the cashback. Read the letter of offer carefully before you commit, and factor the clawback into any decision to switch again in the next few years.
Cashback vs a lower interest rate, which actually saves more?
This is the question that matters most, and the honest answer is: The interest-rate difference almost always outweighs the cashback over anything longer than a couple of years. A few thousand dollars paid once is a rounding error compared to a rate that's 0.3–0.5% cheaper compounding over a 2–5 year fixed term, let alone the full remaining loan term.
That doesn't mean ignore cashback. It's a genuine, useful lump sum, especially if you use it well. It means don't let a headline cashback number distract you from comparing the actual rate on offer. The best outcome is usually finding the sharpest rate available for your situation and collecting whatever cashback comes with it, rather than chasing the biggest cashback number on its own.
This is exactly why MyRateCheck models cashback as a lump-sum reduction against your principal rather than just a number in your bank account. It shows you the combined effect of the rate gap and the cashback together, which is the number that actually matters.
Costs that can offset your cashback
Before you count on the full cashback figure, weigh it against the real costs of switching: legal fees, any break fee on your current fixed loan, and application/valuation costs. Our refinancing guide breaks down typical dollar figures for each of these.
See it against your own numbers
Generic percentages are a starting point, not an answer. Enter your actual loan balance, rate and term into the free MyRateCheck calculator to see what a real cashback offer, combined with today's best rate, would mean for you.
Related reading: our NZ mortgage rates guide, refinancing guide, or the FAQ.