A refinance cashback can look attractive when you're reviewing your home loan. Some lenders offer cashback incentives to eligible borrowers who refinance, with the amount and eligibility requirements varying between lenders and offers.
However, the largest upfront cashback does not necessarily mean the lowest overall cost.
A lower interest rate may reduce interest costs over time, while cashback is generally a one-off payment. Which option provides greater value will depend on factors including your loan balance, interest rate, fees, loan features, remaining loan term, how long you expect to keep the loan and the conditions attached to the cashback offer.
Following the recent cash rate increase, this comparison may be particularly relevant for borrowers reviewing their variable home loan.
On 29 September 2026, the Reserve Bank of Australia announced a 0.25 percentage point increase in the cash rate target, from 4.35% to 4.60%, effective 30 September 2026.
The four major banks have announced 0.25 percentage point increases to their variable home loan rates, effective 9 October 2026. Other lenders may apply different changes or effective dates.
This guide explains some of the factors you can consider when comparing a refinance cashback offer with a home loan offering a lower interest rate.
What is a refinance cashback?
A refinance cashback is a promotional payment that may be offered by a lender when an eligible borrower refinances an existing home loan to that lender.
Cashback offers are generally used by lenders as an incentive to attract new customers. They do not necessarily reduce the interest rate or ongoing cost of the loan.
Depending on the amount and conditions, a cashback payment may help offset some refinancing costs or provide an upfront financial benefit.
However, the cashback should be considered alongside the ongoing interest rate, fees, features and conditions of the new loan.
Before relying on an advertised cashback offer, check:
- The minimum eligible loan amount
- Whether the offer applies to refinancing
- Whether refinancing from a lender within the same banking group is excluded
- Maximum loan-to-value ratio requirements
- Whether different rules apply to owner-occupier and investment loans
- Application and settlement deadlines
- When the cashback is paid
- Whether repayment or clawback conditions apply if you leave the lender within a specified period
- Whether the offer is available through your chosen application channel
- Whether the cashback can be combined with other discounts or fee waivers
Promotional offers and their terms can change. Check the lender's current eligibility requirements and terms and conditions before relying on an offer.
Why the ongoing interest rate matters
Your home loan interest rate affects the interest charged on your outstanding loan balance.
Even a relatively small difference between two interest rates can affect the estimated cost of a loan over time. The actual difference will depend on factors including your loan balance, repayment type, remaining term, fees, offset balance and future interest rate changes.
A cashback, by comparison, is generally paid once. Receiving cashback does not necessarily mean that the associated loan will have the lowest overall cost.
For this reason, comparing a cashback offer with another loan should involve more than comparing the upfront payment.
A practical way to compare refinancing options
One way to begin comparing refinancing options is to look at the estimated costs and benefits over a period that reflects how long you realistically expect to keep the loan.
Consider:
Potential upfront benefits
- Cashback
- Fee waivers or discounts, where applicable
Potential costs
- Interest over the comparison period
- Establishment or application fees
- Ongoing package or account fees
- Offset account fees
- Discharge costs from your existing lender
- Valuation fees
- Settlement and registration charges
- Fixed-rate break costs, where applicable
- Any Lenders Mortgage Insurance implications
- Any cashback repayment or clawback conditions
The result will depend on the particular loans being compared and your circumstances.
Rather than relying on a single advertised feature, consider the estimated overall cost and features of each option.
Compare the total cost over a realistic period
A common mistake when reviewing refinancing options is focusing only on the advertised interest rate or headline cashback amount.
Instead, consider comparing the estimated costs over a period that is meaningful for your circumstances.
This may include reviewing:
- Estimated interest over the selected period
- Principal repayments
- Establishment or application fees
- Ongoing package or account fees
- Offset account fees
- Redraw or transaction fees
- Discharge costs from your current lender
- Valuation fees
- Settlement and registration charges
- Fixed-rate break costs
- Any potential Lenders Mortgage Insurance
- The cashback amount and payment timing
- Any cashback repayment or clawback conditions
When comparing loan structures, also check whether the remaining loan term is being kept consistent.
Refinancing an existing loan into a new 30-year term may reduce required repayments in some circumstances, but extending the repayment period can result in more interest being paid over time.
What about the comparison rate?
Where a comparison rate is provided, it can help consumers compare certain costs associated with different loans because it incorporates the interest rate and certain fees and charges into a single percentage figure.
However, a comparison rate does not include every possible cost, benefit or loan feature and is calculated using a prescribed loan amount and term.
It may not reflect your actual loan balance, remaining term, offset balance, repayment behaviour or individual circumstances.
Consider the comparison rate together with the loan's interest rate, fees, features, conditions and relevant product information.
Cashback conditions can change the result
A cashback offer may only be available if particular eligibility requirements are met.
Depending on the offer, requirements may include:
- A minimum loan balance
- A maximum LVR
- Settlement within a particular period
- Eligible loan or borrower types
- Refinancing from an eligible lender
- Specific application channels
Some promotions may exclude internal loan switches, refinances within the same banking group, loans above a specified LVR or certain borrower and loan types.
You should also check whether some or all of the cashback may need to be repaid if you refinance again, close the loan or make certain changes within a specified period.
These conditions should form part of your comparison, particularly if you think you may sell, refinance again, change ownership or restructure your lending.
Don't overlook offset, redraw and flexibility
The interest rate is important, but it isn't the only feature to consider.
An eligible offset account may reduce the amount of the loan balance on which interest is calculated when money is held in the linked account, subject to the lender's terms.
A redraw facility may allow access to eligible additional repayments, again subject to lender rules and restrictions.
When comparing loans, check:
- Whether an offset account is available
- Whether it is a 100% or partial offset
- Whether additional fees apply
- Whether the offset is available on the particular loan product
- How redraw works
- Whether additional repayments are restricted
- Whether fixed-rate portions limit additional repayments
- Whether a split fixed and variable structure is available if appropriate
A loan with a lower advertised interest rate is not necessarily the most appropriate option if it does not provide features that are important to you.
Likewise, paying for loan features you are unlikely to use may increase the overall cost without providing a meaningful benefit.
Is cashback plus a competitive rate worth considering?
A cashback combined with a competitive ongoing interest rate and suitable loan features may be worth including in a comparison where you meet the eligibility requirements.
However, cashback should not be considered in isolation.
Likewise, the lowest advertised interest rate should not automatically determine your choice. Fees, loan features, eligibility requirements, introductory pricing and other conditions can affect the overall cost and suitability of a loan.
When comparing options, look at the complete loan structure rather than focusing on one promotional feature.
FinanceCorp has access to a panel of more than 25 lenders and hundreds of loan products. The lenders and products considered will depend on your circumstances, eligibility, requirements and applicable lender criteria.
Not every lender or loan product available in the Australian market is included on FinanceCorp's lender panel.
Our role is to help you understand and compare loan options that may be available through our lender panel, including relevant rates, fees, features and promotional offers.
Refinancing home loan checklist
Before deciding whether to refinance, consider:
- Confirming your current interest rate and loan balance
- Checking how your lender will apply any announced rate change
- Requesting a payout figure from your existing lender
- Asking your existing lender whether your current rate can be reviewed
- Obtaining the full terms and conditions of any cashback offer
- Confirming whether you meet the cashback eligibility requirements
- Checking minimum loan amounts and maximum LVR requirements
- Identifying expected refinancing and switching costs
- Checking for fixed-rate break costs
- Determining whether Lenders Mortgage Insurance may apply
- Comparing ongoing interest rates and relevant comparison rates
- Reviewing applicable fees
- Comparing offset, redraw and additional repayment features
- Considering the estimated cost of the options over a period relevant to you
- Checking whether refinancing would extend your remaining loan term
- Confirming any cashback repayment or clawback conditions
- Considering your need to maintain accessible emergency savings
- Reading the relevant loan documentation and terms before proceeding
Review your home loan with a Home Loan Health Check
A refinance cashback can provide an upfront benefit for eligible borrowers, but it should be considered as one part of the overall loan comparison.
Similarly, a lower interest rate can affect ongoing interest costs, but the interest rate alone does not tell you whether a particular loan is appropriate for your circumstances.
The comparison should consider the interest rate, relevant comparison rate, fees, refinancing costs, loan features, cashback conditions and the period you realistically expect to keep the loan.
FinanceCorp's Home Loan Health Check can help you review your existing home loan and understand loan options that may be available through our lender panel.
Where appropriate, a FinanceCorp Finance Manager can help you compare relevant options from our lender panel and explain applicable rates, fees, features, costs and promotional conditions.
The lenders and products available for consideration will depend on your circumstances, eligibility and lender criteria.
Start a Home Loan Health Check:
https://mortgage-check.com.au/loan-health-check
Learn more about refinancing:
https://financecorp.com.au/refinancing-home-loan
Contact FinanceCorp:
https://financecorp.com.au/contact/
Phone: 1300 410 784
Ultimately, the largest cashback or lowest advertised interest rate should not be considered in isolation. The overall loan structure, estimated costs, features, eligibility requirements and your individual circumstances should all form part of the decision.
Important Information
This article contains general information only and does not take into account your individual objectives, financial situation or needs. It is not a recommendation that you apply for, refinance, vary or remain in any particular credit product.
Interest rates, fees, lender policies and cashback promotions can change. Cashback offers are subject to lender eligibility criteria, offer terms, application requirements and settlement conditions.
Before acting, consider your own circumstances and whether the relevant loan structure is appropriate for you. Credit applications are subject to lender eligibility, assessment and approval.
Any calculations or examples used in connection with this information are estimates only and do not constitute a quote, promise or guarantee of savings. Actual repayments, interest costs and refinancing outcomes will depend on factors including the loan balance, interest rate, repayment type, remaining term, fees, loan features, lender assessment and future rate changes.
FinanceCorp has access to a panel of lenders. Not all lenders or products available in the Australian market are included on our panel.
Please refer to FinanceCorp's website for FinanceCorp's applicable credit licensing and Credit Representative information.