The recent surge in refinancing activity in Australia’s housing market has led to a flurry of incentive offers from lenders seeking to attract new customers. These offers, ranging from cash bonuses to frequent flyer points, are designed to entice homeowners to switch to a new lender in order to take advantage of lower interest rates and potentially save thousands of dollars over the lifetime of their loan.
However, experts warn that homeowners considering these offers should exercise caution and carefully weigh up the costs and benefits involved. While the upfront incentives may seem attractive, they are often just a small component of the long-term costs of a home loan, and borrowers need to take into account a range of factors, including interest rates, fees, and repayment options, when making their decision.
One of the key risks associated with refinancing is that the cost of the new loan may end up being higher than the cost of the existing loan, particularly if the borrower fails to take into account all of the associated fees and charges. For example, some lenders may offer a cashback incentive to switch to their loan, but may charge a higher interest rate or impose other fees and charges that end up cancelling out the benefit of the cashback.