Hi, I recently refinanced my $300k home loan for the very first time since purchasing my first home and received a $2000 cashback from ANZ.
My broker advised against fully offsetting the loan for the first 3 weeks, suggesting that it might breach the cashback terms and lead to the reversal of the $2000. I haven't seen this mentioned in the terms and conditions, and it seems unusual to me. I'd appreciate your thoughts on this advice.
Thanks!
I don’t know what interest rates you’re using but I’m getting almost 10x what you calculated so not exactly a negligible amount
300000 x 6% x 3 / 52 = $1,038.
That’s right
That's on the entire loan amount!
An offset account may have what, $5-10k in it tops? Probably even less in the first 3 weeks of a loan.
But lets say someone has $10k laying around.
$10k @ 6% over a year is $600
For 3 weeks of no offset, it's about $34 in additional interest.
OP didn't say how much money is sitting in the offset, but as a first home buyer with a tiny loan I can't imagine it being much at all.
Don't stress OP. Unless you've got $300,000 in cash sitting in the offset to 'offset the entire loan', 3 weeks of no offset won't cost you much at all.
Impact will depend on the size of your loan. This is not heard of. Should challenge the broker if not mentioned in T&Cs.
Thanks heaps - sounds good
Brokers get paid on the net loan amount i.e loan amount less offsets ,the broker is trying to maximise his comms. This run to check the net loan happens a week to two after the loan settles , which explains the time suggested. Up to you , if you feel the broker is a good sort and want to help him , go for it. The cashback rebate is based on the loan amount, not net outstanding , so will be paid even if you offset the full loan amount.
Thanks heaps, really helpful advice - appreciate it
As others have mentioned, this is for the brokers benefit, not yours.
I always offset the loan after refinancing, it doesn't void cashback at all. You should check T&C's (it might be a new clause) but I've never seen it come up before over 5 or so refinances and my last one was to ANZ about a year ago.
The fact your broker isn't being upfront about it would make me more likely to say (profanity) them/ignore them especially as it does impact you financially in terms of higher interest.
Thanks heaps, I’ve read the T&Cs and there’s no mention of it whatsoever. I’ve lost trust in this broker so I’ll take your advice and top up my offset immediately
Is there a reason you went through a broker and not do it yourself from the get go?
I thought it would save me time at the time but in retrospect probably didn't lol my bad
Thanks all for your comments - most of you were absolutely right and there was nothing in the T&Cs about voiding the cashback. Took your advice and topped up my offset asap and saved myself $1000 of interest. Thanks heaps everyone for your input. Never using this broker again.
"thoughts on this advice"
you chose the broker, the reasons should have included they know what they are doing
3 weeks interest is $150
.