Beginner's Guide to Refinancing for Cashback Offers

A cashback offer is worth taking only if the savings from the new loan outlast the costs of moving.

Lenders advertise cashback to attract borrowers who want to refinance a home loan. The payment is a one-off. The interest rate, fees and features of the loan stay with you for years. For Carnegie homeowners and investors, the sensible approach is to weigh the whole loan, not just the headline amount.

What Is a Cashback Refinance?

A cashback refinance means you move your home loan to a new lender, or a new loan with your current lender, and receive a cash payment once the loan settles. Lenders usually attach conditions, such as a minimum loan amount, and may recover the cashback if you close the loan within a set period. Always read those terms before you apply.

Moneysmart describes staying with your current lender but moving to a different loan as refinancing internally. Both routes can be worth checking, as the offer terms differ between lenders.

Do the Costs of Switching Cancel Out the Cashback?

They can. A cashback only helps if it exceeds the total cost of moving, which may include a discharge fee on your old loan, an application fee on the new one and, for fixed loans, a break fee.

ASIC's Moneysmart lists these costs for borrowers who switch. It also notes that a borrower with less than 20 per cent equity might pay lenders mortgage insurance, which can add to the cost of switching. Exit fees on most residential loans signed on or after 1 July 2011 are prohibited under the National Consumer Credit Protection Regulations, but break fees and discharge fees are not covered by that ban.

Under ASIC's guidance, brokers must also consider whether the overall savings are likely to outweigh any benefits you lose, with broker fees counted in the cost. A cashback that looks generous can be weaker than a lower rate with no payment at all.

A Worked Example: Cashback Versus a Lower Rate

A cashback is worth less than it looks when the rate is higher than a rival offer. The comparison below uses an illustrative rate of 6.75% p.a.; your actual rate will depend on your lender and deposit size.

Consider a Carnegie owner-occupier with a $600,000 loan and 25 years remaining. At an illustrative 6.75% p.a., the repayment is about $4,145 a month. Lender A offers a cashback of $3,000 at that rate. Lender B offers no cashback but a rate 0.25 percentage points lower, at 6.50% p.a., where the repayment is about $4,051 a month.

The difference is about $94 a month, or roughly $1,130 a year. After about two years and eight months, Lender B's lower repayments have overtaken the $3,000 cashback, and the gap keeps growing for as long as you hold the loan. If the owner plans to sell or refinance again within two years, Lender A may suit more. If they plan to stay for the long term, Lender B costs less.

The outcome is a decision based on how long you will keep the loan, not on the size of the payment. Our loan repayment calculator lets you test your own numbers.

When Is a Cashback Refinance Worth It?

A cashback refinance is worth it when the new loan is at least as competitive on rate and features, and the cashback is on top of that. Treat the payment as a bonus, not the reason to move.

A home loan health check is a sensible first step. It compares your current rate, fees and features against what is on offer, so you know whether switching improves your position. If you are leaving a fixed term, the fixed rate expiry calculator shows what to plan for.

The trade-off is that some loans with large cashback offers carry higher ongoing rates or annual fees. Over a long loan term, those can exceed the one-off payment.

Will the Lender Approve a Refinance?

A lender must check that the loan suits you and that you can afford it, and your repayment history is a key part of that. If you have made repayments on time and the new rate lowers your repayments, ASIC's guidance says a like-for-like refinance is likely to be suitable.

If you want to borrow more as part of the switch, the assessment is wider. Banks also test new borrowers' repayments at a rate 3.0 percentage points above the loan rate, and APRA confirmed on 28 May 2026 that this buffer stays in place. Check how much you could borrow with our borrowing capacity tool before you apply.

If you hold an Australian Government 5% Deposit Scheme loan, refinancing to a lender outside the scheme ends its benefits. Check with Housing Australia and your broker first.

Does a Cashback Payment Affect Your Tax?

The tax treatment of a cashback depends on your circumstances, so speak to your accountant before you rely on any outcome. For investors, the ATO says a refinance can change the interest you can claim, for example where extra money is borrowed for private use.

The ATO also says borrowing expenses on an investment loan over $100 are generally deducted over five years or the loan term, whichever is shorter. If you are refinancing an investment property, our investment loan refinance page explains how we approach it.

Getting Advice Before You Sign

Brokers must act in your interests and put them first where there is a conflict. That standard is set out in Part 3-5A of the National Consumer Credit Protection Act. It applies to advice on whether to refinance, and also to advice to stay where you are.

AXTON Finance can compare cashback offers against the full cost of each loan, so the decision rests on your figures. Our mortgage broker in Carnegie team works with homeowners and investors across the area, and our mortgage refinancing page outlines the options.

Call one of our team or book an appointment at a time that works for you, and we will assess whether a cashback refinance suits your goals.

Frequently Asked Questions