While some banks make a big show of their first home buyer deals, it's worth noting that regardless of whether you're buying a first home, or refinancing, it always pays to shop around and compare deals.
Banks' websites usually just advertise their standard mortgage rates, not the best deals they offer to customers with 20% deposits and good credit ratings. And, in the same way, banks don't show their hands when it comes to their cashback deals.
But most are prepared to offer cashback deals of up to around 1% on new residential lending. Remember, if you don't ask, you don't get… so always push for the best deal possible.
However, seven lenders are currently advertising cashback deals specifically for first home buyers (FHBs):
First Home Buyer Mortgage Cashbacks
ANZ
ANZ's cashback offer is for FHBs taking out new home loans of at least $200,000. There's a cashback of $5000, as long as you keep your mortgage with the ANZ for at least three years.
ASB
ASB, the current winner of Canstar's Bank of the Year Home Loans Award, is also handing over cash to FHBs: $5000, if you take out a home loan of $200,000 or more with the bank for at least three years.
BNZ
BNZ offers a cashback of $5000 for FHBs who take out a mortgage of at least $250,000 for a minimum of three years.
Kiwibank
Kiwibank is offering a minimum cashback of $5000 to first home buyers who borrow $250,000 or more and keep their mortgage with the bank for at least four years.
SBS
SBS Bank's FirstHome Combo offers a range of benefits for customers who bundle all their banking, insurance and KiwiSaver products with the financial provider, including a $2000 cashback:
- Interest rate discounts
- $3000 cashback
- $1000 to help cover first year’s home and contents insurance premiums on policies with SBS Insurance
- $1000 in total towards mortgage holder(s) SBS Wealth KiwiSaver account(s)
The Co-operative Bank
The Co-operative Bank is Canstar's Bank of the Year: First Home Buyers. When researching this year's award, our analyst team highlighted The Co-operative Bank generous cashback offer.
The Co-operative Bank offers a 1% cashback (up to $15,000) on a FHB home loan of over $250,000. The offer is conditional on the loan staying with The Co-operative Bank for at least three years.
Unity
Credit union Unity is offering a $5000 cash contribution for FHBs on loans of $250,000 and above. Borrowers must have a minimum 20% deposit, or a 5% deposit if applying for a Kāinga Ora First Home Loan. Again, you've got to keep your mortgage with Unity for three years to keep all of the cash, and other Ts&Cs apply.
Unity is also advertising a $3000 cashback for home loan applicants applying for a normal home loan.
Westpac
Westpac offers a cashback of $5000+ for FHBs who take out a mortgage of $250,000 or more. Ts&Cs apply.
Mortgage cashbacks: are they worth It?
Free cash is great. But banks are not renowned for giving away money. So before you get excited about a 1% cashback, it's worth considering what it could cost you.
Most cashback deals require you to lock into a mortgage with a lender for at least three years. You get the cash upfront, and the home loan provider then spreads the cost of that cash lump sum over the next three to four years. So if you decide to refinance with another lender during that period, it's likely that you will have to repay a percentage, or even all, of your cashback.
You should also factor in the size of your loan and the interest rate you are being charged.
For example, the average FHB mortgage is currently around $550k. So if you're getting the maximum $5k cashback listed above, it works out to around 0.91% of the average FHB loan sum. So even without a cashback offer, if you can secure a mortgage rate that's 100bps lower than the cashback provider's rate, you'll save in interest charges.
So, ultimately, choosing a lower overall rate, rather than the enticement of a cashback, could work out a better deal.
