Property Investment
3 min read
Author: Andrew Nicol
Managing Director, 20+ Years' Experience Investing In Property, Author & Host
Got a $500k home loan?
This week, 3 major banks announced that they will pay you $7,500 just to switch to them.
Competition is heating up between the banks.
But this time they’re not just dangling lower interest rates … they’re also paying out cold, hard cash.
Banks often pay a cashback when you take out a mortgage with them.
That’s a lump sum you get when:
Last week, most cashbacks were around 0.8%–0.9% of your loan.
So, if you took out a $500k mortgage, they would transfer you $4,000 - $4,500.
But on Monday, ANZ started offering a 1.5% cashback. It’s so good that ASB matched it mid-week, and BNZ joined the party yesterday.
If you move a $500k loan to one of these banks, you might get a $7,500 cash back.
That’s $3,000 more (just for switching banks).
Here’s how to see how big a cashback you can get:
So in this example, you could get a $10,500 cashback for switching your $700k mortgage between some banks.
And you can use that $10,500 cashback however you like. To pay down your mortgage, to buy something nice for Christmas.
Just be aware that it’s not all pure ‘profit’. There are often legal costs (and a few fees) to switch banks.
👉 I want to book a free meeting with Opes Mortgages to see if I can get a cash back
Although the 1.5% cashback is attractive. Keep in mind that it’s not free cash.
There are some T&Cs … and not everyone can get it. Typically, you need to:
And if you leave the bank (pay off the mortgage or switch banks) within the clawback period, then you’ll often have to pay some of the cash back.
So let’s say you already got a cashback 6 months ago, it might not be worth switching. Because you’d have to pay back some of the money you just got.
Earlier this week, one of my clients had a $600,000 loan they wanted to move to a different bank.
Another bank had offered this client a $9,000 cashback to switch banks.
BNZ didn’t want to lose the customer, so they offered the same deal.
The client was already committed, so they decided to switch anyway. And it wasn’t free. It did cost them $2k in legal fees to switch banks.
But they still walked away with $7,000 left over.
Keen to see if you can get one of these massive cashbacks? Here are the 3 steps.
See if you can get a cashback and if it’s worth it (after you pay your legal costs). They might also be able to get you ‘retention cash’ just to stay with your bank.
Want to switch banks? The new bank needs to approve your mortgage. So you will need to apply to the new bank.
After all this, you need to get your lawyer to ‘discharge’ the old mortgage from your title and add the new bank. That’s where the legal fees come in (often around $1,500 - $2,000).
Let’s say you have a $600k mortgage and earn $80k a year.
If you get $7,000 in cash from the bank (after your legal fees).
That’s the equivalent of working for 5.8 weeks.
So is it worth 5.8 weeks of work (in this example) to switch banks? In my view, yes.
But your situation will be different from this example. So talk to your mortgage adviser.
And if you need a good mortgage adviser, book a free meeting with my team at Opes Mortgages here:
👉 I want to book a free meeting to see if I can get a cashback
Our advisers at Opes Mortgages don’t charge you (90%+ of the time). We get paid by the bank.
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.
