Home loan cashback deals for May 2021

The cash rate was held at 0.10 per cent yet again this month by the Reserve Bank of Australia, but lenders are still waging a home loan war to bring in new customers.

On Monday, competitor lender, Athena, announced it was cutting interest rates to offer the lowest fee-free variable rate on the market of 1.99 per cent for owner-occupiers paying principal and interest with LVRs of 60 or less. Athena research also noted that home loan refinance volumes had grown by 25 per cent in 2020, and a further 10 per cent in 2021.

Low home loan rates are just one of the many ways lenders are fighting to encourage new customers on to their books. Another way some lenders are coming out on top is by offering competitive cashback deals, with some sign up offers up to $5,000. Lenders are also battling for your business by putting generous bonus credit card rewards and reduced Lender’s Mortgage Insurance on the table.

Let’s explore some of the home loan deals on offer for May 2021.

What deals are on offer this month?

• Cashback deals

It’s no secret that the upfront costs associated with applying for a mortgage or even putting down a deposit can make your eyes water. Cashback deals are one way lenders help to make the home loan application process easier, with offers between $1,000 and $5,000 up for grabs, depending on your loan amount.

In May, almost all cash back deals on offer are for refinancers only, with 22 out of 23 cash back deals strictly for refinancers, according to RateCity's database. Beyond Bank has bucked the trend by providing up to $1,000 cashback for first home buyers.

The cost of refinancing can be tricky, with recent RateCity research showing the average upfront fees and costs are typically $583.41. Cash back deals may be offered in the form of funds deposited into your bank account, as a gift card, or subtracted from your loan balance or upfront fees. This means cash back deals may be used to reduce upfront costs, be put towards the property through a new appliance or white good or pocketed for a rainy day.

• Reduced LMI

Nowadays saving up a 20 per cent deposit to avoid paying Lender's Mortgage Insurance (LMI) can be so difficult that government assistance is available to help first home buyers get a mortgage with deposits as small as 5 per cent.

St. George is offering to help customers with this costly insurance through its reduced LMI deal. The offer is available to eligible first home buyers with a 15 per cent deposit, looking for an owner-occupier home loan, and planning on making principal and interest repayments.

According to St. George, the eligibility requirements include:

1. "Be a first home buyer applying for your first home loan for your first property
2. Apply for a home loan with St. George from Monday 13 July 2020
3. Your home loan has an LVR up to 85 per cent at the time of formal approval
4. Loan size must not be over $850,000
5. For joint applications, only one applicant needs to be a first home buyerOnly one property financed per application.”

• Qantas frequent flyer points

You may be able to earn bonus Qantas frequent flyer points when you sign up for a home loan.

Macquarie Bank and Qudos Bank currently offer a home loan sign-up deal that rewards borrowers with Qantas Points. These points may be available at the time of approval or released over your loan term.

Plus, you won’t need to spend on eligible purchases to earn these reward points bonuses.

Source: RateCity.com.au. Data accurate as of 12/05/2021.

• Keep in mind that there is more to a home loan than a deal being offered to you, and it’s always important to compare the interest rates, fees and features of a loan before applying. For more information on whether one of the above loans may suit your finances, consider using our Home Loan Calculator to see how potential repayments could fit in your budget.

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