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Comparing Home Loan Cashback Deals
Navigating the ins and outs of home loans can be complex. Especially when understanding the various deals and offers available. One such offer that has gained popularity is the home loan cashback offer.
But what exactly is a home loan cashback? How does it work, and more importantly, how can it benefit you?
Understanding Home Loan Cashback Offers
Home loan cashbacks are a type of incentive offered by some lenders. They are usually aimed at attracting new customers or encouraging existing ones to refinance their eligible home loans held with other lenders. Usually, a cashback offer involves the lender you are refinancing to giving you a set amount of money after you have refinanced your eligible home loan and it has settled. However, it's important to note that these offers come with their own set of terms and conditions.
Eligibility for a cashback offer varies between lenders and often centres around minimum loan amounts and maximum loan-to-value ratios as well as other conditions. Understanding these terms is crucial when it comes to evaluating the value of a cashback offer.
What Are Home Loan Cashback Offers?
Home loan cashbacks are usually a promotional offer from some lenders. Usually, the lender will provide a cash payment to borrowers after they have taken out a new loan or refinanced an existing one. The cashback amount is typically a set amount and may increase the more you borrow. It can generally be used for different things like paying off loans or credit card debt, covering moving or refinancing incurred expenses, or adding to your savings.
How Do Cashback Offers Work?
Cashback deals usually involve borrowers being providing a lump sum payment after their eligible loan has settled. Timing of when the payment is made will vary between lenders.
It is important to note that while a cashback can provide a lump sum payment, it may affect other aspects of the loan. Make sure you have reviewed the relevant terms and conditions and understand the offer.
Benefits of Home Loan Cashback Offers
Home loan cashback deals may offer benefits to borrowers.
Some potential benefits include:
- Lump sum to add to your savings
- Using the payment to reduce your loan size
- Flexibility in using the cashback if allowed by the terms and conditions
- Choice to pay down other debts like credit cards etc if allowed by the terms and conditions
Immediate Savings and Reduced Loan Costs
One of the possible benefits of a cashback offer is the potential to add the funds to your savings. Depending on the size of the cashback you are eligible for, this could be a significant amount. You could also choose to use the cashback to reduce the overall cost of the loan if you hold a loan product that allows this. For example, you can use it to pay down the principal, which can reduce the total interest paid.
Impact on Loan Terms and Interest Rates
Cashback deals may also impact the terms of the loan. Some lenders may have higher interest rates to compensate for the cashback.
Therefore, it's important to consider the impact of the cashback on the overall cost of the loan.
Key Considerations When Comparing Cashback Deals
While cashback deals can be attractive, it is important to consider all other aspects of the loan as well. For instance, the interest rate, loan term, and fees and charges can significantly impact the overall cost of the loan. To compare IMB’s offerings, check out IMB’s Home Loan Comparison Calculator to do the maths when considering fees and charges on IMB loan products.
Here are some aspects to consider:
- Interest rate and loan term
- Fees and charges
- Terms and conditions of the cashback offer, and any terms and conditions associated with the relevant loan product
- Eligibility criteria for both the loan product and the cashback offer
Calculating the Real Value of Cashback Offers
The real value of a cashback offer is not just the cashback amount. It also includes the impact of the offer on the overall cost of the loan.
For instance, if an offer has a large cashback, the value of the cashback to you may be reduced if the loan product has a higher interest rate or fees. In contrast, a smaller cashback with loan product that has a lower interest rate may provide better value overall. Therefore, it's important to calculate the real value of the offer by considering all the relevant factors and any additional costs like fees and charges.
How to Find the Best Cashback Home Loan Deals
Finding the best cashback home loan deal for you requires research and comparison. You should compare offers from different lenders and evaluate their terms and conditions and consider whether they are suitable for your situation. Also, consider the impact of the cashback offer on the overall cost of the loan.
When comparing cashback offers you might want to:
- look at available offers from different lenders that you are eligible for
- consider the terms and conditions
- consider what offer, if any, best suits your circumstances and financial goals
Comparing Offers from Different Lenders
Different lenders offer different cashback deals. Some may offer a larger cashback, while others may have better loan terms. Comparing the offers from different lenders and considering your current needs and financial goals will assist you in finding the best deal for you.
Consider all the factors when choosing a home loan. Don't just focus on cashback, but also on the overall benefits. Choose the lender and home loan that gives you the most value for your money and best suits your needs.
Cashback Deals and Refinancing
Refinancing your home loan can be a strategic move, especially when cashback deals are on the table. These deals can provide a boost to your savings account and might reduce your loan costs. However, it is crucial to consider the long-term impact of these deals on your loan.
When considering a cashback offer, you might want to consider:
- the applicable interest rate and impact the refinance will have on your monthly repayments
- the effect on your loan tenure
- the terms and conditions of the cashback offer including whether you are eligible for it
Finally…
Choosing a cashback home loan is a personal decision. It depends on your financial situation, your long-term goals, and the terms of the offer. Always compare deals, read the fine print, and consider the long-term impact on your loan.
Schedule an appointment with an IMB lender, or begin your refinance application now.
