How Cashback Works When Switching Banks

What is mortgage cashback?

When you switch your home loan to a new bank, many lenders will offer you a cashback — a lump sum payment deposited into your account shortly after your loan settles. It's the bank's way of competing for your business, and in a competitive market, it can be surprisingly generous.

Cashbacks in New Zealand typically range from 0.5% to 1% of your loan amount. On a $700,000 mortgage, that could be $3,500–$7,000 landing in your account.

Which banks offer cashback in NZ?

Cashback offers change frequently, and not all banks advertise them publicly. As of 2025, major NZ banks including ANZ, ASB, BNZ, Westpac, and Kiwibank have all run cashback promotions at various points. The availability and size of the offer often depends on:

• Your loan size (larger loans attract bigger cashbacks)
• The current competitive environment
• Whether you're coming from a competing bank
• Your loan-to-value ratio (LVR)

A mortgage adviser has visibility across multiple lenders at once and can often negotiate a cashback offer that isn't publicly listed.

The catch: clawback clauses

This is the part most people don't read carefully enough.

Almost every cashback offer comes with a clawback period — usually 2–4 years. If you switch away from the bank, sell your property, or repay your loan in full before this period ends, you'll have to repay some or all of the cashback on a pro-rata basis.

For example: you receive a $6,000 cashback with a 3-year clawback. If you switch banks after 18 months, you'd owe back $3,000.

This matters a lot if your situation is likely to change — you're planning to sell, expecting to receive an inheritance, or might want to move lenders again in the near future.

Does the cashback offset the switching costs?

Switching banks isn't free. Typical costs include:

• Break fee (if you're mid-fixed-term) — can be significant
• Discharge fee from your current bank — usually $150–$300
• Legal fees for the new mortgage — often $800–$1,500, though some banks contribute to these

In many cases, the cashback more than covers these costs — especially if you're at the end of your fixed term and avoid a break fee. But it's worth running the numbers rather than assuming you'll come out ahead.

Is cashback always worth chasing?

Not necessarily. A bank offering a large cashback might also be offering a higher interest rate. A 0.2% difference in rate on a $600,000 loan adds up to around $1,200 per year — so a $4,000 cashback could evaporate quickly if the rate isn't competitive.

The right approach is to look at the total cost over the fixed term, not just the cashback in isolation. A good mortgage adviser will model this for you.

How to access cashback offers

Some cashback deals are available if you apply directly, but the best offers are often only available through mortgage advisers. Banks use cashbacks as a way to attract volume, so they're often willing to offer more through an adviser channel than through their branch network.

Your adviser will also handle the paperwork, liaise with both banks, and time the switch so you don't end up paying break fees unnecessarily.

When is a good time to switch?

The ideal window is when your fixed term is expiring — typically in the 60–90 days before rollover. At this point you can switch without a break fee, negotiate a competitive rate, and collect any cashback on offer.

If you're mid-term, it can still be worth switching if the rate saving is significant enough — but you'll need to weigh the break fee carefully.