New Home Loan Cash Bonus

Discussion in 'Loans & Mortgage Brokers' started by ttn, 3rd Jun, 2020.

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  1. ttn

    ttn Well-Known Member

    9th Sep, 2016
    Would anyone like to share why there has been many refinance cash bonuses from the FI but not many cash bonuses for brand new home loans?

    is it because brand new HL costs more to do than the refinance ones?

    Arent they loans aint loans?
  2. Peter_Tersteeg

    Peter_Tersteeg Well-Known Member Business Member

    18th Jun, 2015
    This is speculation, but refinances cost customers more than a new purchase (in terms of the cost of the loan). There's costs such as discharge fees, possible fixed rate break fees, new mortgage registration and deregistration fees and new application fees (over what they paid the previous lender).

    Overall the cost to the customer to refinance is generally about $700 - $1200, or more if there's fixed rate break costs. I guess lenders are wanting to remove this barrier to refinancing. Consumer costs for a loan on a new purchase aren't a barrier because the purchaser is going to have to pay them regardless.

    The problem is now lenders are offering to compensate significantly more than the actual cost to refinance. Some people are refinancing, getting the cash, then refinancing again. I'd much rather see lenders reimbursing the cost of moving, but nothing more. Remove the barriers to refinancing, but have lenders compete on product and service, not the size of a bribe.
    ttn likes this.