RefinanceMakeMyLoan brokers compare dozens of lenders and owe you a Best Interests Duty — your bank doesn't.
A few thousand dollars in your account within weeks of settlement is a powerful lure, and lenders know it. Cashback offers come and go with the competitive cycle, but the underlying question never changes: is the upfront cash worth more than what you will pay for it over the life of the loan? Sometimes yes, often no. Here is how to evaluate a cashback offer honestly — no lender names, just the method.
Lenders are not in the business of giving money away. A cashback is a customer-acquisition cost, and it is paid because the lender expects to earn it back — through the interest margin on your loan over the years you stay. That is not sinister; it is how acquisition offers work in every industry. But it tells you where to look: if the lender expects to recover the cashback from you, your job is to work out how quickly, and whether a no-cashback loan at a sharper rate would leave you further ahead.
The honest comparison is always the same:
If the cashback loan carries a higher rate — even slightly higher — the extra interest compounds every month for as long as you hold the loan. On a typical mortgage balance, a small rate difference can exceed the value of the cashback within the first couple of years, and everything after that is pure cost. A cashback attached to a genuinely competitive rate can be real value; a cashback attached to a mediocre rate is just your own future interest handed back to you early, with a haircut.
A useful discipline: decide which loan you would choose if neither offered a cashback. If the answer changes only because of the cash, be suspicious of your own maths.
Cashback loans sometimes sit inside package products with annual fees, or carry application, valuation and settlement fees that a competitor waives. A few hundred dollars a year in package fees quietly erodes the upfront cash. Use the comparison rate as a first filter, then read the fee schedule. Also check the offer's fine print for:
Clawback is the arrangement under which a benefit is recovered if you leave early, and it operates on two levels.
First, some lender offers include conditions that let the lender recover the cashback or charge higher exit fees if you discharge the loan within a set period — read the terms before you sign, and diarise any dates.
Second, if you use a broker, lenders claw back the broker's commission when a loan is discharged early, typically within the first two years. A broker who arranges your cashback refinance and then sees you churn to the next offer six months later can be left having done the work for nothing — or may pass a clawback fee on to you if your broker agreement allows it. Ask your broker directly how clawback works in their agreement so there are no surprises on either side.
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Serial cashback chasing — refinancing every year or so to harvest the next offer — looks clever on a spreadsheet and often is not. Each cycle you pay discharge and government registration fees, spend hours on paperwork, and add another enquiry to your credit file. Lenders can see refinancing frequency in your credit history, and a file showing rapid, repeated applications can make the next approval harder, not easier. Meanwhile, if each cashback loan carries a slightly-above-market rate while you hold it, you are paying rent on every dollar of cash you harvested.
There is also an approval cost people forget: every refinance is a full application assessed under responsible-lending rules. If your circumstances dip — a job change, a new car loan, a growing family — you can find yourself stuck on the last cashback loan's rate with no ability to move. Churning only works while you remain highly approvable, which is precisely when you least need the cash.
Cashbacks are not always a trap. They stack up when:
In other words, the cashback should be the tiebreaker, never the reason. If a refinance already makes sense on rate, fees and features — the ground we cover in our step-by-step refinance guide — then upfront cash is a genuine bonus.
If you cannot answer all five, you are not ready to sign. You can see how a refinance is assessed and structured on our refinance page, and our guide on when to refinance covers whether now is the right time at all.
A broker can put a cashback offer side by side with the sharpest no-cashback loans you qualify for and show you the crossover point in plain numbers — and under the Best Interests Duty, the recommendation has to serve you, not the offer. If you want that comparison done properly, get in touch.
For an owner-occupier home loan, a cashback is generally treated as a discount or rebate rather than assessable income, but tax treatment can differ for investment loans, where it may affect your cost base or deductions. Confirm your situation with your accountant or the ATO rather than assuming.
Some offers include conditions allowing the lender to recover the cashback or charge fees if you discharge the loan within a set window, and broker commissions are separately clawed back by lenders within roughly the first two years. Read the offer terms and ask your broker how their clawback arrangement works before you commit.
Each application adds an enquiry to your credit file, and a pattern of frequent refinancing is visible to lenders under comprehensive credit reporting. One move is harmless; rapid, repeated churn can make future approvals harder and gives lenders a reason to look more closely at your application.
Model both loans over your actual remaining term — same balance, same term — and compare total repayments plus fees, then subtract the cashback from the cashback loan's cost. The loan that leaves you ahead over the period you realistically expect to hold it is the better deal, regardless of which one pays cash upfront.
No. Offers typically carry conditions such as a minimum loan amount, a maximum LVR, owner-occupier or principal-and-interest requirements, and sometimes exclusions for certain loan purposes. Couples should also check whether the offer pays per application or per borrower — it is usually per application.
This article is general information only and doesn't consider your personal objectives, financial situation or needs — it isn't personal credit advice, and lending criteria, rates, fees and government schemes change. Before acting, speak with a licensed MakeMyLoan broker or credit representative who will assess your circumstances and provide a credit guide before any credit assistance is given.
