Mortgage cashback in NZ: what it is and how to negotiate it

Mortgage cashback is a lump sum a bank pays you as an incentive to take your home loan with them. In the current New Zealand market it's typically around 1% of your loan amount — so on a $600,000 loan that's roughly $6,000, though the exact figure moves with competition between banks and the size and quality of your lending.

It's usually paid as a one-off contribution shortly after your loan draws down, and banks often frame it as help towards your legal fees or moving costs — but once it's paid, it's yours to use however you like.

Cashback is a customer-acquisition tool. Winning a mortgage customer is valuable — home-loan borrowers tend to stay for years and often bring their everyday banking, savings and insurance across too. A cash incentive is a simple, visible way for a bank to tip your decision their way.

It's commonly used as an alternative or an addition to a sharper interest rate. Some banks would rather protect their advertised rate and compete with cash; others will discount the rate instead. Many will do a bit of both if you ask.

Banks rarely lead with cashback in their advertising, and a branch lender won't always offer their best number unprompted. You generally have to ask directly — and be specific: "What cashback can you offer on this lending?"

A mortgage broker (adviser) negotiates cashback for clients routinely, so they usually know the current unadvertised levels across the main banks and can push for the top of the range on your behalf. If you'd rather not haggle yourself, that's one of the clearest reasons to use a broker.

The single most effective lever is competition. To use it well:

• Get competing offers in writing from two or three banks, showing the rate and the cashback each is prepared to offer.
• Use them as leverage — show your preferred bank (or your broker) what the others have put on paper and ask them to match or beat it.
• Approach banks around the same time, not one after another. A cluster of fresh, comparable offers gives you real bargaining power; stale offers from months apart don't.

Be polite but clear that you're comparing. Banks expect it, and the difference between the first number offered and the negotiated one can be significant.

Cashback almost always comes with a clawback: an agreement that you repay some or all of it if you leave the bank or refinance within a set period. That period is commonly 3 to 4 years, but it varies by bank and by deal.

How much you repay also varies. Some banks pro-rate it — the longer you stay, the less you owe back — while others require full repayment if you leave at any point inside the clawback window. Don't assume; the terms are in your loan documentation.

Check your specific loan agreement rather than relying on a general rule of thumb. If you think there's any chance you'll move banks or sell within a few years, factor the clawback in — the cashback isn't truly "free money" until that period has passed.

A cashback percentage is worth different things depending on how long you're locked in. A 1% cashback tied to a one-year fix leaves you free to shop around again in twelve months — but you could be exposed to clawback if you refinance early. The same 1% on a three-year fix ties you in longer, which suits the clawback period better but reduces your flexibility if rates fall.

When you compare offers, look at the rate, the cashback and the fixed term together — a slightly smaller cashback on a term that suits your plans can be the better deal.

Cashback is real money and worth chasing, but it shouldn't be the only thing you weigh. A large cashback paired with a higher interest rate can cost you more over the fixed term than a smaller cashback with a sharper rate. Weigh it alongside the actual rate, the clawback terms and the bank's overall service — not in isolation.