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Kiwibank is offering a new outsized incentive for home loan borrowers who want to go big, with up to $10,000 on offer for a million dollar mortgage

Personal Finance / news
Kiwibank is offering a new outsized incentive for home loan borrowers who want to go big, with up to $10,000 on offer for a million dollar mortgage
up to $10,000
Image sourced from Shutterstock.com

The battle for home loan business just got more intense as mortgage market volumes slow.

Kiwibank is now offering customers one percent of their new home loan as a cash contribution, up to $10,000. The loan would need to be $1 million to qualify for $10,000.

This is a significant escalation in the cash-back incentive, which up until now had rarely maxed out over $5,000. And a 0.7% incentive rate has been more common.

Kiwibank's targets include first home buyers but their real target are switchers from the other main banks.

The cash contribution offer is available for new Kiwibank home loan applications applied for from June 7, to June 28, 2022 and is conditional on meeting certain conditions.

More information and terms and conditions on the offer can be found here on Kiwibank’s website.

To be eligible, loans must be drawn down by July 29, 2022 and the loan must be for at least $300,000. A minimum 20% equity is required and the borrowers regular income must be credited to a Kiwibank account. Loans for business purposes are excluded.

Strict clawback rules also apply. Within the first year, Kiwibank can claim back 100% of the cash contribution if you pay off the loan. Within the second year, they can claim back 75%; in the third year the claim back is 50%; and in the fourth year, they can claim back 25% of the contribution they paid the borrower.

Kiwibank has also launched two new interactive digital home loan tools, a first home buyer calculator and a repayments and structuring calculator.

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63 Comments

Margin? What margin?

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1

This $10,000 offer of "free money" really shouts loudly how it costs the bank zero to produce this, and the $1,000,000 digital mortgage - written into existence with a keystroke. However, the borrower signs over their time, energy, and income to the bank!

When market prices go south, that $10,000 will vanish in a morning, along with a decent amount of hard saved deposit!

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A million dollars is a brave mortgage these days.

There is no such thing as a free lunch.

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10

If you're a "skilled professional" maybe.

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Even skilled professionals would be brave to submit to $70k+ worth of interest per annum.

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12

If they lacked job security and a high salary I guess.

Sounds scarier if you put your pinky to your lips when you say "million dollars".

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3

At what salary do you think a million dollar mortgage doesn't require bravery?

Now repeat the exercise taking into consideration the guaranteed capital losses.

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6

Perhaps some aren't as DGM you Brock and buy for the long term... No pain no gain as they say...

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11

It's hard to tell brave and stupid apart sometimes 🤣

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13

It depends when you look at it, hindsight often shows some of these stupid decisions were smart decisions...

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5

It's also hard sometimes to tell apart smart and lucky.

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12

I’ve always thought hindsight doesn’t change whether a decision was good. If I put all my money on red at the casino and red comes up, was that a good decision or a bad one? In my mind it was still a bad decision. 

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13

Not sure why you've compared purchasing a house to spending all your money at a casino. A house for many is just somewhere to live, to put roots down and have a family. Holding cash and not being able to comit to anything given perceived risk is something that you could definitely regret in hindsight...

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7

And one last attempt of reviving FOMO

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3

Who's having a family with a $1m mortgage? Servants to raise the kids? 

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I dunno, I figured a skilled professional would be good for a couple hundy. Maybe a bit more for good spelling and grammar.

Then again, I don't know what "skilled professional" entails, sounded like some baller level that'd put a lowly manual labourer to shame.

If you're not prepared for losses then it's probably best you don't play.

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200k minus tax is about 133k.

At 7% that's 70k burned in interest charges leaving 63k for principal repayments, rates, insurance and any other living costs.

It's looks like a very thrifty life for the skilled professional for the sake of owning a dump in Glenfield.

This is true, if you're not prepared for large losses it's wise step back at the moment.

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12

Don't skilled professionals got mates or partners? Otherwise maybe they should have a smaller house and lower mortgage.

I'm not sure which is the better long term strategy, thrifty living or carefree exuberance. 

If you're not prepared for large losses and think you have to liquidate at a moment's notice, never is a good time.

We dont necessarily need to own anything, end of the day we just need to "use" a house. Like a boat, I don't mind using one from time to time, but stuff owning one. Mooring, maintenance, fuel, etc. Bugger that.

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3

'The great reset' would suit you perfectly...

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Birds of a feather tend to flock together.  With skilled professionals that's generally at the airport. ✈️✅

Yes, they need to be brave to take out a million dollar mortgage. That was the original point. A cheaper house or a plane ticket are wiser options.

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5

✈️✈️✈️🎉🎉🎉

Escape the great NZ 2022 onwards depression and housing collapse.

How's the build, brickies rates are double and everyone else is up 50%, builder must be spewing at $1650/m2.

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All good so far.

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They sound bad at maths.

And you get to reap the rewards 👍

Attempting a build post covid takes more balls than a million dollar mortgage I reckon.

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4

They've raised the base price by 7% on that house plan since we locked in ours last year. It's a large company and they seem to have their shit together with trades and suppliers.

Large house will skew the m2 rate down a bit.

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If it's a barn maybe. 

Tiny houses have a crazy square metre price though.

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Probably went a bit overboard. Oh well 😎

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Make my walls longer, guvnah.

Looked at a build last week, 10 grand a square, 300m2 😯

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The ticket clippers will have well fed families.

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3

No wage increases for your workers.

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Pay a million now your 200 k deposit will be gone by end of year, not a smart move, the downturn in housing price’s in NZ will be biggest on record make Ireland’s crash seem quite serene 

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7

I never really understood these "incentives". $10k in the hand seems like nothing when you're $1m in the hole, plus there are all kinds of strings attached anyway. What kind of person would be attracted to this? Surely you'd save more than $10k by choosing the bank with the lowest fees and best rates, rather than wasting your time with gimmicks.

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12

Similar idea to Grant Robertson's $350 cost of living payment. It only costs the bank once.

Low fees and interest rates cost the bank forever.

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It’s basically 0.2% a year, plus the advantage of having it upfront which further reduces your interest payments. So I guess it depends if you can do better than their interest rate - 0.2%. 

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the idea is you jump banks every 3 years to keep reaping the cashback.  Obviously not worth it if the bank is not also matching competitors rates, and i guess there are a lot of people who just think - oh wow $5k, i can buy a new TV, and never do the math on the rate.  These people should use a broker who does the math for you.

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2

A broker, who just adds cost to you via commission... sure, not directly, but you're paying. 

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With that size mortgage - they are really offering circa 1 month payment holiday. They still get to enjoy the other 20 years of your monthly payments

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2

They're discounting your interest rate by 1% for the first year.

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2

Do you have to pay tax on it or can a bank just gift you 10k? If so, why not have a term deposit that has a lower interest rate but a tax free gift?

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1

Wasn't that the original idea of bonus bonds and bonus saver accounts? "Winnings" where tax free.

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Maybe I should get my boss to pay me in winnings. 

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5

Not unusual at the moment, the only unusual thing is that they're advertising it... watch the cash wars ramp up between banks.

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4

.

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Website:

Conditional that your banking relationship with us doesn't significantly change for four years.

I would imagine the balance of most loans would "significantly change" as typically people repay them.

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Over four years? Nah not really haha. Principal back on a table 30 year loan at 6% and $1m over four years would be like ~$30k and ~$60k  in interest from first year. $30k out of a $1m asset to the bank is chump 

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I'd say they'd be talking about shifting or downsizing the scale of your lending/insurance.

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I'd say that's a bit of an over interpretation. The bank I work for only claws back the cash con if you refinance your lending to another bank within the clawback period. Even if you sell the house and repay all lending we don't take it back. 

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They'd be an outlier... a bank will usually clawback if you sell and repay. Unless you're buying another and dont want cash again. 

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Standard condition.  We traded up in December, had a temporary floating facility as part of our loan of 20% to bridge the sale as we settled on our purchase before our buyers settlement date (less than a month).  

I queried with ANZ whether a portion of their rebate would need to be paid back after paying down and discharging the floating portion, they said nope.  

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You know things are not going well when the gimmicks come out.

Same with developers offering free whiteware, cars, etc.

A new coat of paint on an old 1950s house has more sales appeal than if the money had been spent on making it warmer, drier, and healthier.

 

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2

Well yeah, character appeals to a lot of people more than practicality.

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Sort of like feelings matters more than facts.

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It is only a start, will see more “specials” on offer as banks are desperate for new business. 

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Yes just a Margin discount and received similar when looked into a new purchase this time last year…weather a million dollar mortgage is a worry is an…all depends…circumstance are a lot more wider in scope than those posting above..being so definitive is simply not perceiving what also can be purchased and circumstances…

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Indeed. If you have limited influence over your earnings and expenses, and have a million dollar mortgage for a trophy house you're living in, maybe it's a concern.

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2

Kiwibank should be rebranded as 'no different to an Aussie bank' but with much more stupid incentives

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Perhaps one day it will be taken over by an overseas bank, the only problem is the “brand name”.

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But they are different.. their offerings are crappier.  No Google apy, crappy online banking, and branch service was abysmal a few years back when i finally got rid of my accounts with them.    Maybe they've improved since then?

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This is an awesome incentive if you are getting a home loan!  And all banks are offering it so just get the biggest amount with the best rate and you're sorted!

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Personally I find this offensive and belittling. But then again, I'm normal. (insert eye roll here..*)

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And now a word from our sponsor?

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