Home loan churning

[Bolt]

Has anyone ever tried home loan churning for the churn bonus? I notice alot of banks offering a $2000-3000 promotion to churn, require an LVR of less than 80-90%, and a minimum financial amount of $250K-$300K.

HSBC – up to $3,288 refinance cashback
Tic:Toc – $2,022 cashback
Westpac – up to $3,000 refinance cashback
Bank of Melbourne – $3,000 refinance cashback
BankSA – $3,000 refinance cashback
Bankwest – $2,000 refinance cashback
Bank of Queensland (BOQ) – $3,000 refinance cashback
Commonwealth Bank – $2,000 refinance cashback
Credit Union SA – $2,500 cashback
Great Southern Bank – $3,000 cashback
ING – $3,000 refinance cashback
ME Bank – $3,000
MyState Bank – Up to $3,000 refinance cashback ($500K refinancing)
NAB – $2,000 refinance cashback
Newcastle Permanent – $2,000 refinance cashback
RAMS – $4,000 refinance cashback
St.George Bank – $3,000 refinance cashback
Suncorp – $3,000 solar home bonus or refinance cash back payment ($500k refinancing)
Virgin Money – $3,000 refinance cashback

Edit: Hoping to hear from @Dr Ralph @sudoer @exceladdict especially.

 

[Dr Ralph]

Has anyone ever tried home loan churning for the churn bonus? I notice alot of banks offering a $2000-3000 promotion to churn, require an LVR of less than 80-90%, and a minimum financial amount of $250K-$300K.

HSBC – up to $3,288 refinance cashback
Tic:Toc – $2,022 cashback
Westpac – up to $3,000 refinance cashback
Bank of Melbourne – $3,000 refinance cashback
BankSA – $3,000 refinance cashback
Bankwest – $2,000 refinance cashback
Bank of Queensland (BOQ) – $3,000 refinance cashback
Commonwealth Bank – $2,000 refinance cashback
Credit Union SA – $2,500 cashback
Great Southern Bank – $3,000 cashback
ING – $3,000 refinance cashback
ME Bank – $3,000
MyState Bank – Up to $3,000 refinance cashback ($500K refinancing)
NAB – $2,000 refinance cashback
Newcastle Permanent – $2,000 refinance cashback
RAMS – $4,000 refinance cashback
St.George Bank – $3,000 refinance cashback
Suncorp – $3,000 solar home bonus or refinance cash back payment ($500k refinancing)
Virgin Money – $3,000 refinance cashback

Edit: Hoping to hear from @Dr Ralph @sudoer @exceladdict especially.

I've looked at this. Couldn't make the numbers work (fees + your time - this isn't going to take 10 minutes like a credit card application). Plus there's also the cost difference of what you're paying for your current interest rate (sub 2% for me). You don't need to worry about this if you have a credit card and pay it of every month, but this is inevitable with a home loan as many of the offers listed will be above what I'm currently paying.

 

[CaptJCool]

Originally did some research as to this option BUT there was a minimum loan commitment that was well above my then outstanding balance so the “aspiration of outright ownership” within a decade was more reassuring than upping the loan balance and paying endless extra interest

 

[daft009]

Same reasons as above.
Considered it but not worth my time as I'm self employed.. Too much paperwork needed

I think there is a thread on ozbargain about this

 

[kpc]

My +1 did this with a mortgage broker but mainly for a better interest rate....the cashback was a bonus. In my opinion it is a PITA...prove of income, rental income, valuation of property etc so I'm not sure I would do it!

 

[Happy Dude]

Whilst hardly churning, I've refinanced two properties recently direct with ANZ and one (a PPoR) was a breeze while the other (an IP) was a PITA.

I'm sure I will go through this again at some point to get a better or fixed rate, or access to to equity, but the cashback just a bonus. I'll probably use a broker.

With the amount of debt these days, it's important to regularly monitor the market to be on the best rate and product possible.

Lenders love a new customer but I'm not churning just for a few grand. Maybe it's worthwhile for those investors with a stack of properties?

 

[Gladstone Tim]

I’m just looking at refinancing as coming to the end of a fixed term rate. Would only consider for the benefits of a better interest rate. I think the cash back wouldn’t match the effort involved and possible poorer interest rate.

 

[Daver6]

I just moved loans with the aid of a mortgage broker. I did receive the $3k churn bonus. It pretty much covers the costs but honestly, I wouldn't churn for the free money. As @Dr Ralph said, it's a fair amount of paperwork and hassle.

Originally did some research as to this option BUT there was a minimum loan commitment that was well above my then outstanding balance so the “aspiration of outright ownership” within a decade was more reassuring than upping the loan balance and paying endless extra interest

You can still achieve this with a new loan and not being worse off. For example, your home is worth $500k and you only owe $100k. Churn loans. Get a new loan for $300k and put $200k in the offset account. You're now only paying interest on the same $100k. Obviously your minimum repayments will be higher, but if you can afford it, you'll just be paying down your loan even quicker. Then once that $100k is paid off you can just close down the loan.

A more tax effective approach would be to take that extra $200k and invest it. Interest on that component is tax deductible. Obviously everyone's situation is different and this is not tax or financial advice.

 

[Bolt]

I feel as though since the banking royal commission, bank fees have come down significantly. I'm considering crunching the numbers with well-known low fee banks like ING, Bankwest, and Tic-Toc.

Any historical data or spreadsheets you have would be appreciated.

 

[jakeseven7]

Yup did it - I’m not self employed so it was surprisingly easy and quick. Better rate and 4K thanks very much.

 

[Happy Dude]

A more tax effective approach would be to take that extra $200k and invest it. Interest on that component is tax deductible. Obviously everyone's situation is different and this is not tax or financial advice.

Do you mean a home loan for a PPoR? If so, I'd have thought the investment would require a separate loan otherwise the taxman would think you're trying to claim for your residence. Plus it'd mean that because you've taken the 200k from the offset, you're now paying non-deductible interest on the 300k, so the investment returns would have to be better than the mortgage rate.

 

[k_sheep]

Urgh you've reminded me my fixed term is up, time to renegotiate. Yuck. Life admin sucks.

 

[burmans]

Do you mean a home loan for a PPoR? If so, I'd have thought the investment would require a separate loan otherwise the taxman would think you're trying to claim for your residence. Plus it'd mean that because you've taken the 200k from the offset, you're now paying non-deductible interest on the 300k, so the investment returns would have to be better than the mortgage rate.

It’s the use of the loan that counts not what it is secured against so as long as you don’t initially put it in the offset account no problem(which was what I thought the OP was suggesting). Doesn’t require a seperate loan but you should keep good records to support how you’ve apportioned the money as yes, the taxman may question it.

 

[CaptJCool]

It’s the use of the loan that counts not what it is secured against so as long as you don’t initially put it in the offset account no problem(which was what I thought the OP was suggesting). Doesn’t require a seperate loan but you should keep good records to support how you’ve apportioned the money as yes, the taxman may question it.

Of course, should you like to pay more tax, don’t claim any deducation......

 

[Daver6]

Do you mean a home loan for a PPoR? If so, I'd have thought the investment would require a separate loan otherwise the taxman would think you're trying to claim for your residence. Plus it'd mean that because you've taken the 200k from the offset, you're now paying non-deductible interest on the 300k, so the investment returns would have to be better than the mortgage rate.

Correct. The loan is secured against the equity in your PPoR. Obviously keeping a manual tab on what money and interest is used for what purpose would be quite painful. While are paying interested on the $200k, you can claim it as an expense if you're using that money for income generating activities. Ie, investing in shares, property etc.

I moved to AMP. Even though I have one large loan secured against my PPoR I actually have the loan split into more than one account. This means I can very easily keep track of the interest component for investment purposes. Additionally each one can also have it's own offset account. Speaking to a mortgage broken might be beneficial. There is someone I used in Perth who I'd highly recommend. Reach out directly if you want her details.