A cashback offer is when a lender pays you a one-off cash payment if you take out a new home loan or refinance your existing mortgage with them. Instead of competing only on interest rates, some lenders offer cashback as an incentive to encourage borrowers to switch.

In Australia, cashback offers are most common when refinancing to a new lender. The amount is usually around $2,000 to $4,000, depending on the lender and the size of the loan. If your loan goes ahead, the cashback is normally paid into your bank account after the new loan settles.

You will usually know about a cashback offer before you start the refinancing process. Lenders typically advertise these promotions, and a broker or comparison service will show which lenders are currently offering cashback as part of their refinance deals.

Many borrowers use the cashback to help cover the costs of refinancing, such as discharge fees from your existing lender, application fees, valuation fees, or settlement costs. These expenses can vary, but cashback offers are often designed to offset most or all of them.

If the cashback amount is higher than the refinancing costs, you may have some money left over after the fees are paid. However, the main reason to refinance should still be securing a better interest rate or loan features, as these can lead to much larger savings over time than a cashback payment alone.