250,000 frequent flyer points with a new mortgage: deal or no deal?
Competition in the home loan market continues to run hot, especially now the spring deals are in.
If you're looking for evidence, it's hard to go past the recent blast of introductory offers of frequent flyer points and cold hard cash to lure you in.
Most recently, NAB has stolen the limelight, offering a whopping 250,000 frequent flyer points for new owner occupier home loans of $250,000 or more, when used in conjunction with a NAB credit card and transaction account.
And while a two-week jaunt around Europe or the States sounds mighty appealing, are these types of deals worth it, after you've packed your bags away in your new cupboard in your new home?
The answer is, probably not.
A quick RateCity comparison reveals that the lowest-rate NAB loan, which is competitively priced at 4.15%, will cost $8688 more than UBank's lowest rate of 3.99%, on a $250,000 loan over 30 years.
And while 250,000 points will take you to London and back twice, the cash equivalent is less than $4000 when you factor in taxes.
Try not to get caught up in the hype. If it looks too good to be true, then chances are, it probably is.
Frequent flyer points and cash back gimmicks are great if they're part of a product you've already selected on its merits, but if that's what's leading your decision-making then it's time to take a step back and crunch the numbers.
Now is a great time to refinance - particularly for owner-occupiers, but you might be better off taking out a lower rate loan and saving on monthly repayments. Better yet, you could take that extra money and use it as additional repayments. Any one of the current rates below 4%, will end up saving you well over $15,000 over the life of the loan.
Just remember - a 30 year home loan lasts over 780 times longer than a two-week holiday to the United Kingdom. That's a lot of slide nights before you can afford your next holiday.
There's a sobering stat to bring you back to earth.