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Thomas Neumeier and Madison Liston are living at his parent's home as they plan their dream wedding.
Key points:
- A record $19.9 billion worth of mortgages were refinanced in February
- Lenders are offering cash backs and other incentives to attract new customers
- Ratecity said many of the offers do not stack up in the long term
They have an interesting strategy for how to pay for their special day.
"What we're planning to do is just by refinancing our six properties at twice each, we should be able to pay for the wedding with that," said Mr Neumeier, who works for a bank but has his loans with other institutions.
They have refinanced each investment property with a different lender to get cashback offers of about $4,000 each time.
"We're just sort of making a game out of it to see how much cashback we can get from the bank," explained Ms Liston.
With interest rates rising at the fastest pace ever, there is a refinancing boom going on, with a record almost $20 billion worth of loans remortgaged in February alone.
Lenders are trying to win customers with a range of incentives including:
- Cashback offers worth between $1,500 - $10,000
- Lenders mortgage insurance waivers
- Frequent flyer points
- Free internet
- Cheaper insurance products
- Fee reimbursements
Jeffry Kam refinanced his $300,000 mortgage last year when interest rates started rising.
He is now looking for an even better deal and is keen to find one with bonus frequent flyer points.
"I do travel overseas regularly to visit friends and family. So it's something that I'll use," Mr Kam said.
He is planning to keep chasing new deals every couple of years to make sure his home loan continues to stack up.
Refinancing pitfalls
RateCity's Sally Tindall said she expected refinancing to remain at elevated levels, but not everyone will be eligible for the best deals.
"We could find that as people come off their fixed rate loans, they can't refinance because they don't have enough equity in their loan to refinance or they can't pass their bank's new serviceability tests at much higher rates," she explained.
RateCity has also calculated whether the deals with cashback offers are better than just taking the lowest variable interest rate available on the market (see how they stack up at the bottom of the article).
Ms Tindall said the bigger the loan size, the more the interest rate matters.
"With the cost of living on the rise, the offer of cold hard cash can be hugely tempting," she acknowledged.
"But before you take one of these deals, think about the short or medium and long-term consequences of that decision."
On a $750,000 mortgage, with 25 years remaining and once interest and fees are paid and the cashback taken off the loan, only one of the big four bank offers works out cheaper after two years, and none of them does after five years.
Mortgage broker Bruce Carr recommended home owners contact their current lender first.
"It just takes a phone call or an email to renegotiate the interest rate back towards the market level," he said.
He warned refinancing too frequently could be detrimental.
"I think those people will, in time, taint their own credit files, and they may find that lenders down the track are not particularly interested in dealing with them," he said.