Learn about home loans with frequent flyer points

Australians love to earn frequent flyer points when signing up for a credit card. But what about with a home loan?

Home loan lenders may offer special introductory bonuses to attract new home loan customers. These could include discounted interest rates, waived fees, or cashback. Some lenders have even offered frequent flyer points as a signup bonus.

There are two ways you can earn frequent flyer points in association with your home loan:

1. Take out a packaged home loan linked to a frequent flyer credit card
2. Choose a lender offering frequent flyer points as a cashback offer

Many banks and mortgage lenders offer home loan package deals, where your mortgage comes bundled with a transaction account, a credit card, insurance, or other financial products. Some of these deals include credit cards that let you earn frequent flyer points on your everyday spending.

While you’re not technically getting frequent flyer points from your home loan in this case, the associated credit card can help you earn points while you manage your mortgage repayments separately.

Some banks and mortgage lenders, such as the big four banks, offer their own reward programs, allowing you to earn points on your spending which can be redeemed for a range of discounts and purchases from participating retailers. 

In some cases, the reward points from these programs can be exchanged for frequent flyer points. Just keep in mind that you won’t earn points from making your home loan repayments.

Some lenders in the past have allowed homeowners to earn frequent flyer points from mortgage payments. 

As long as you regularly keep up with your home loan repayments, you can build up frequent flyer points every month, to be redeemed for flights, upgrades and other rewards.

A few of these home loans also offer bonus reward points when you reach certain home loan anniversaries as well. 

At the time of writing, RateCity’s database shows that Qantas is the only current lender offering home loan customers the ability to earn frequent flyer points.

The Qantas Money Home Loan offers customers 100,000 Qantas frequent flyer points every year into your account (you must be a Qantas Frequent Flyer Member). This could be enough points to take you across the globe, or take the family around Australia.

At the time of writing, this offer is available for first time buyers and refinancers with established properties (no off-the-plan homes or construction loans). The loan is also available to self-employed homeowners (eligibility criteria applies).

There are other cashback deals available to homeowners besides nabbing frequent flyer points. 

Traditional cashback deals

A cashback home loan deal is actual cash that the lender will provide you with (typically $2,000 - $3,000) upon loan approval. 

Cashback home loan offers are popular with both refinancers and homebuyers, as they may help pay for the upfront costs associated with a home loan - especially for refinancers. The process of refinancing a home loan alone can cost anywhere from a few hundred dollars to thousands, depending on your situation.

The cashback you receive may be used for a range of purposes, such as purchasing new appliances, making home improvements, or even contributing it towards your mortgage payments.

Reduced Lenders Mortgage Insurance

Lenders Mortgage Insurance (LMI) is arguably one of the biggest costs associated with a mortgage.

It can cost tens of thousands of dollars, depending on the value of your property. You will either have to pay this insurance up front or add this cost to your mortgage if you have a home deposit under 20%. To help home buyers, some lenders have offered waived or reduced LMI deals.

At the time of writing, only St. George is offering reduced LMI to eligible first home buyers. The offer of $1 LMI is available to eligible first home buyers with a 15% deposit, looking for an owner-occupier home loan under $850,000, and planning on making principal and interest repayments.

Depending on your personal and financial situation, a frequent flyer program could be very useful to you. If you travel regularly, and are confident that you can comfortably afford the payments, financial products that let you earn frequent flyer points can offer a great deal of additional value. 

It’s always worth keeping in mind that the more features, benefits, and other “bells and whistles” a home loan offers, the higher its interest rates and/or fees are likely to be. If a home loan package offers a rewards program, whether it’s for frequent flyer points or not, may cost you more in interest and fees than a “no frills” home loan deal.  

Reward points, including frequent flyer points, often expire after a length of time has passed. If you’re unlikely to get a chance to use your points before they expire, your home loan with frequent flyer points may offer less value than you thought.

Before signing up for a home loan with frequent flyer points, it may be worth comparing other home loan options on the market, in case there are other home loans that are better suited to your financial needs. 

A mortgage broker may be able to help you find the right home loan for your goals, and also handle much of the application process on your behalf.