If you go for the higher cashback, you’ll get an extra $1,500.

But, you also need to factor in the higher interest rate.

In this case, Bank A offers a 0.2% lower rate.

That’s $1,000 less per year compared to Bank B. And since this is over 3 years, that’s about $3,000 less.

So, in this instance, the bank with the lower cashback is offering a better deal.

Do the numbers always work out this way?

No, sometimes the bank with the higher cashback offers a better deal. But, there is sometimes more than meets the eye.

That’s why you shouldn’t just choose the bank with the higher advertised cashback.

Work with your mortgage adviser to figure out which is the best deal (and see if you meet the cashback criteria).

And just remember, if you are switching banks, there are legal fees involved in changing the mortgage.

It’s about $900 if the property is in your own name. And just over $1,000 if you own the property in a trust.

So if your mortgage is small, it may not be worth switching banks just for a cashback.

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Andrew Nicol

Managing Director, 20+ Years' Experience Investing In Property, Author & Host

Andrew Nicol, Managing Director at Opes Partners, is a seasoned financial adviser and property investment expert with 20+ years of experience. With 40 investment properties, he hosts the Property Academy Podcast, co-authored 'Wealth Plan' with Ed Mcknight, and has helped 1,894 Kiwis achieve financial security through property investment.

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