Cashback is the loudest number in Australian refinancing and the least examined. Plenty of them are worth taking — the value simply sits in the four conditions attached rather than the headline figure.
This note covers the specific maths; the seven checks covers the general method.
Condition one: the ongoing rate afterwards
A cashback is paid once. A rate is paid monthly for as long as you hold the loan. On a typical mortgage balance, a rate sitting a fraction of a percentage point above the competitive market will exceed a few thousand dollars of cashback within a small number of years — and then keep going.
Work out the annual interest difference between the cashback product and the best genuine alternative, then divide the cashback by that difference. That is how many years the cashback covers.
Condition two: the clawback period
Most cashbacks are repayable if the loan is discharged within a set period, commonly one to two years.
That clause changes the character of the deal: it is a payment attached to a commitment. Find the period in the terms early, because it determines whether the cashback is money or a lock-in with a sweetener.
Condition three: eligibility
Common conditions include a minimum loan size, a maximum loan-to-value ratio (80% is typical), owner-occupier only, refinances from an unrelated lender only, principal-and-interest only, and lodgement through a particular channel.
Read these before the headline. Discovering one of them mid-application costs weeks and leaves a credit enquiry behind.
Condition four: payment timing and basis
Timing varies — at settlement, or 60 to 90 days after, sometimes conditional on the loan remaining in a particular structure. Cashbacks are also frequently paid per application rather than per property or per split, which matters if your borrowing is split across several.
The calculation that settles it
Total switching cost, minus the cashback, divided by the monthly saving on the ongoing rate. That gives your break-even month. Compare it against the clawback period and against how long you realistically expect to hold the loan.
If break-even lands well before the clawback period ends, the offer is doing real work for you. If it lands after, the cashback is buying a rate you would not otherwise choose.
Method source: Moneysmart — switching home loans, published by ASIC. Verify any specific offer on the lender’s own terms page, with the date attached.
Reviewed 17 August 2026.