Mortgage Cash Back NZ: How Cash Contributions Work and What to Check

Take out a home loan and the bank hands you several thousand dollars in cash. It sounds like the one part of buying a house where money flows the wrong way, and in a sense it is. Banks pay these lump sums, usually called a cash contribution or cash back, because winning a new mortgage customer is worth a lot to them over the life of a loan. The catch is never hidden, but it is easy to skim past: the money comes with a commitment to stay put for a set number of years, and leaving early means paying some or all of it back.

This guide explains how mortgage cash backs work in New Zealand, how the amount is worked out, who qualifies, and how the repayment conditions (the clawback) actually operate. It also covers the comparison that matters most, cash now versus a lower interest rate, and what to weigh up before switching lenders to chase a new payment. Offers change often, so any figures below are the ones the banks were publishing on their own websites when this guide was checked on 7 October 2026. Always confirm the current offer and its terms before you apply.

Quick answer

A mortgage cash back is a lump sum a lender pays you for taking out a new home loan with them. Right now the big banks advertise first home buyer offers clustered around $5,000, on minimum new lending of $200,000 to $250,000. In return you agree to keep your loan, and usually your everyday banking, with that lender for a minimum period, most often three years and in one case four. Repay, sell or refinance inside that period and you repay a share of the cash, usually calculated pro rata for the time remaining. The cash is yours to spend, but it is payment for loyalty, not a gift.

What a mortgage cash back actually is

A cash contribution is a marketing incentive dressed as a thank-you payment. The lender pays it into your transaction account around settlement, once the loan is drawn. It is separate from your loan amount: you do not borrow it, and it does not reduce what you owe. Think of it as the bank buying your business upfront, in the expectation of earning interest from you for years afterwards.

That sets it apart from two other sweeteners banks use:

• A rate discount trims the interest rate on all or part of your loan. There is no lump sum; the benefit arrives gradually as lower interest costs, and it can be worth far more than cash over time.
• A fee waiver or legal fee contribution removes a specific cost, such as an application fee, or pays a set amount towards your lawyer. The value is fixed to that cost rather than paid to you as spendable cash.

The three are often bundled into one negotiation, which is where things get muddy. A lender may offer generous cash but hold firm on rate, or sharpen the rate and reduce the cash. Comparing one bank’s headline cash figure against another’s, without looking at the rate and fees attached, tells you very little. Some lenders also pay a contribution towards legal costs when you refinance to them, which sits in the same family of incentives even though it never reaches your pocket as cash.

How the amount is calculated

Banks structure cash offers in two main ways.

The first is a flat amount. This is what the advertised first home buyer offers currently use. As checked on 7 October 2026, ANZ advertises a $5,000 cash contribution for first home buyers with a new loan of at least $200,000. ASB’s First Home Buyer Cash Contribution is also $5,000, on a loan of $200,000 or more. BNZ advertises at least $5,000 on new first home lending of $250,000 or more. Westpac advertises $5,000 or more on a new first home loan of $250,000 or more, and Kiwibank advertises a cash contribution of at least $5,000 for first home buyers borrowing $250,000 or more.

The second is a percentage of the loan, sometimes subject to a maximum cap. This structure is less visible in current advertising, because percentage offers are often negotiated case by case, for larger loans or for customers bringing their lending across from another bank. Where a percentage applies, the dollar figure grows with the loan size until the cap bites, so a borrower with a $900,000 loan can be offered considerably more than a borrower with a $300,000 loan. BNZ’s offer terms, for instance, describe the payment in terms of a cash back rate set out in the loan agreement, with $5,000 as the advertised minimum.

Either way, three features are consistent. The money is tied to new lending, not to topping up an existing loan by a small amount. It is generally paid once, shortly after the loan is drawn, rather than in instalments. And it is offered at the bank’s discretion: meeting the headline criteria does not guarantee the payment, because standard lending criteria still apply and offers can be withdrawn at any time.

Bank	Advertised offer (checked 7 Oct 2026)	Minimum new lending	Minimum stay
ANZ	$5,000 cash contribution, first home buyers	$200,000	At least 3 years
ASB	$5,000 First Home Buyer Cash Contribution	$200,000	36 months, pro-rata repayment
BNZ	At least $5,000 cash back, first home	$250,000	3 years, stepped repayment
Westpac	$5,000 or more cash back, first home	$250,000	See current offer terms
Kiwibank	At least $5,000 cash contribution, first home buyers	$250,000	4 years, daily pro-rata repayment

Who can get one

Eligibility starts with the basics. The loan must be new lending, above the bank’s minimum amount, and you must pass the lender’s normal credit assessment. Beyond that, the current advertised offers share some patterns worth noting.

First home buyers are the target market. Every advertised offer in the table above is a first home buyer offer, which is a shift from the days when cash was mainly used to lure switchers. Definitions are strict and bank-specific. BNZ, for example, requires all applicants to be first home buyers as it defines them, and its terms exclude cases where parents co-borrow and fund more than a quarter of the loan. ASB requires you to be buying your first home to live in, and to have never owned a residential property in New Zealand, although it keeps a discretion to pay a reduced amount where one borrower has owned property before. Kiwibank requires an owner-occupied purchase and excludes loans to companies and partnerships. BNZ’s offer cannot be used for business purposes.

Not a first home buyer? The offers are quieter, not absent. Banks still use cash to win refinances and larger loans, but the amounts tend to be negotiated rather than advertised. The only way to find out what is on the table is to ask, ideally while more than one lender is competing for your business.

Your deposit size matters less than you might expect. BNZ states its cash back applies even with a deposit as low as 5 percent, and ASB says the same about lending with less than a 20 percent deposit. Behind the scenes, though, the Reserve Bank’s loan-to-value ratio (LVR) rules limit how much low-deposit lending banks can do at all: currently up to 25 percent of new owner-occupier lending can have an LVR above 80 percent, while for investors up to 10 percent of new lending can sit above 70 percent LVR. If a bank’s low-deposit quota is tight in a given month, approval can be harder regardless of the cash offer. None of this changes how much you can borrow, which still comes down to income, expenses and the lender’s assessment. The cash is a reward for borrowing you were approved for anyway.

One more practical point from ASB’s terms: you need to ask. ASB requires borrowers to tell their lender or broker before settlement that they want to be considered for the cash contribution. It is not always applied automatically, and that is a fair prompt for dealing with any bank.

The minimum term and how clawback works

This is the part that turns a windfall into a contract. Every cash contribution comes with a minimum period, and the repayment rules for leaving early, called a clawback, are spelled out in the offer terms or a separate agreement you sign at drawdown.

The periods differ. ANZ’s contribution is conditional on staying with ANZ for at least three years. ASB’s agreement is built around three years as well, with repayment if the loan ends within 36 months. For customers who leave Kiwibank, the relevant period is four years, longer than its rivals, and Kiwibank’s condition is broader than just keeping the loan: you must maintain your banking relationship, which it defines as having your income paid into a Kiwibank account, keeping your lending with the bank, and holding the accounts you had when the cash was paid. Stopping your salary credit can trigger a repayment calculation even if the loan itself has not moved.

The repayment maths comes in two styles:

• Pro rata over time. The amount you owe back shrinks steadily as the period runs. ASB calculates its pro-rata share by the months remaining. Kiwibank works daily: it divides the contribution by 1,460 days (four years of 365 days) and charges back the days you did not complete. In Kiwibank’s own published example, a $4,000 contribution repaid at day 650 means handing back $2,219.
• Stepped by year. BNZ reduces the repayable share in annual steps: leave within the first year and the full amount is repayable; in the second year, 66 percent; in the third, 33 percent; after three years, nothing.

A hypothetical example

The following is an illustration only, not a real offer. Imagine a lender pays you $6,000 cash on a new loan, with a monthly pro-rata clawback over three years. After 18 months you sell the house and repay the loan. You are halfway through the term, so you repay half the cash: $3,000. Under a stepped schedule of the kind BNZ publishes, selling at the same point lands in the second year, so you would repay 66 percent instead: $3,960. Same cash, same exit date, nearly a thousand dollars difference purely because of how the schedule is built. This is why the repayment method, not just the headline amount, belongs in your comparison.

Two triggers catch people out. First, selling your home counts. Repaying the loan from sale proceeds within the period triggers the clawback just as refinancing does, and BNZ’s terms state this expressly, including mortgagee sales. Second, the clawback is on top of any fixed rate break cost. If you leave partway through a fixed term while interest rates have fallen, the bank may charge a break cost for its loss on the fixed loan, calculated separately from the cash repayment. The two amounts together can be substantial, and neither is negotiable after the fact.

What you can use the cash for

Once it lands in your account, the money is generally yours to spend as you like. Banks market it around the costs of moving: legal and conveyancing fees, a registered valuation, moving costs, insurance, and the furniture and appliances a new home suddenly needs. There is usually no requirement to prove what you spent it on.

A financially tidy option is to put the cash straight against the loan, or park it in an offset or revolving credit account if your loan structure has one, where it reduces the balance interest is charged on. On a fixed loan, check the limits on extra repayments before assuming you can pay a lump sum without cost. Either way, spending the cash on the move and keeping the loan intact is the outcome the bank has priced for. Just remember that wherever the money goes, the obligation to repay it on early exit stays behind.

Cash back versus a lower interest rate

For most borrowers this is the real decision, because you rarely maximise both. The trick is to compare total cost over the period you realistically expect to keep the loan, often the clawback period or your fixed term, rather than being dazzled by the lump sum.

Interest is relentless where cash is one-off. On a $600,000 loan, a rate just 0.10 percent lower saves roughly $600 of interest in the first year alone, and a 0.25 percent gap is worth around $1,500 in that year. Those savings keep flowing for as long as the rate advantage lasts, while a $5,000 cash payment is spent once. Spread over three years, a quarter-percent rate edge on a $600,000 loan is worth something in the region of $4,000 to $4,500, close to the cash itself, and it keeps paying you if you stay beyond the fixed term. On a smaller loan the arithmetic flips: 0.25 percent on $300,000 is only about $750 a year, so the cash can genuinely be the better end of the deal.

A sensible routine is to ask each lender for its best offer twice over: once with maximum cash, and once with the sharpest rate it can do, then compare the total of interest, fees and cash across the same time horizon. Our guide to home loan rates NZ sets out the current rate landscape the cash needs to be weighed against. Also factor in the value of flexibility. Cash locks you to a lender for years; a borrower who expects to move, sell or restructure soon may rationally prefer a clean rate with no strings.

Refinancing and switching lenders

Cash contributions are the sugar on most refinance offers, and switching can make sense when a rival’s rate, cash or both beat what your current bank will do. Run the full cost of leaving before you sign anything:

• Clawback owed to your current bank if you are inside a cash contribution period.
• Break costs if any part of your loan is fixed and rates have moved against the bank. Kiwibank’s home loan terms describe the mechanics plainly enough: break costs can apply when you change or end a fixed component and market rate movements mean the change causes the bank a loss.
• Exit and setup fees, such as a discharge fee to your old lender and application or legal costs at the new one. Some lenders contribute towards legal costs for refinancers, which reduces this bill but is another conditional incentive to read carefully.

The Commerce Commission’s consumer guidance makes the same point in general terms: you can shop around and switch lenders even mid-contract, but work out what it will cost to switch, and compare the overall cost and terms of the existing loan with the new one. A $5,000 cash payment that costs you $3,000 in clawback and break costs to collect is a $2,000 benefit, and only if the new rate is at least as good.

If your current bank wants to keep you, it may counter with a retention payment or a better rate when you ask. You will not always be told this option exists. Asking costs nothing.

The tax position

Keep this in perspective. If you are buying your own home to live in, a bank cash contribution is generally not taxed as income in your hands; it is an inducement attached to a private borrowing arrangement, not earnings. Inland Revenue has published technical material on cash incentives paid to banking customers, mainly examining how they are treated under the financial arrangements rules where a loan relates to income-earning activity. That is where the position gets more involved: if the property is rented out, used in a business, or held partly for income purposes, a cash incentive can have tax consequences, and any clawback repayment can interact with your deductions. This section is a general steer only. If your borrowing is anything other than a straightforward loan on the home you live in, get advice from an accountant before assuming the cash is tax-free.

Questions to ask the lender

Before you accept any cash offer, get clear answers to these, in writing where you can:

1. How much cash will I actually receive, and when is it paid?
2. What is the minimum period, and what exactly must I keep with the bank during it: the loan only, or my income and accounts too?
3. How is the repayment calculated if I leave early: daily, monthly, or in annual steps?
4. What counts as leaving? Does selling my home, repaying in full, or moving only part of the loan trigger repayment?
5. Is the cash available with your best interest rate, or does taking one reduce the other?
6. Are there fees the cash needs to cover, such as application, legal or low equity fees?
7. Can the offer be combined with other deals, such as first home buyer packages or legal fee contributions?

More explainers on borrowing, rates and everyday money decisions sit in our Finance, Tax and Money hub.

FAQs

Is a mortgage cash back really free money?

No. It is a payment for committing to a lender for a set period, and part or all of it is repayable if you leave within that period, whether by refinancing, selling up or repaying the loan. Treat it as yours only once the minimum term has run its course.

Can I get a cash back if I am not a first home buyer?

Possibly, but the widely advertised offers at the moment are aimed at first home buyers. For movers, investors and people refinancing, cash is more often negotiated than published, and the amount tends to depend on the size of the loan you are bringing. The only way to know is to ask lenders directly and let them compete.

When is the cash actually paid?

Around settlement. ASB’s terms say its contribution is paid on or after settlement once eligibility is confirmed, and other lenders work similarly, paying into your account shortly after the loan is drawn down. Confirm the timing, because the money cannot cover your deposit; it arrives after the loan exists.

What happens if I sell my house a year after receiving the cash?

Expect to repay a large share of it. Under BNZ’s published schedule, leaving within the first year means repaying 100 percent, while pro-rata lenders like ASB and Kiwibank charge back the portion of the period you did not complete. A sale triggers the repayment just as a refinance does.

Does taking a cash back mean a worse interest rate?

Not automatically, but the two are negotiated together, so a bigger cash offer can come with less movement on rate or fees. Ask for the lender’s best rate with and without the cash, and compare the total cost over the next three to four years rather than the size of the lump sum.

Is the cash back taxed?

For an owner-occupier buying a home to live in, generally no. The tax treatment becomes more complicated where the property earns income, such as a rental, because Inland Revenue’s analysis of cash incentives engages the financial arrangements rules. If that is you, take advice rather than guessing.

Sources

• ANZ, Home loans (cash contribution offer for first home buyers): https://www.anz.co.nz/personal/home-loans-mortgages/
• ASB, Home loans and First Home Buyer Cash Contribution terms: https://www.asb.co.nz/home-loans-mortgages/buying-first-home/buying.html
• BNZ, Cash back home loan offer and offer terms and conditions: https://www.bnz.co.nz/personal-banking/home-loans/cash-back-home-loan-offer
• Westpac NZ, Buying your first home sooner (cash back offer): https://www.westpac.co.nz/home-loans-mortgages/first-home/
• Kiwibank, Cash contribution and terms and conditions: https://www.kiwibank.co.nz/personal-banking/home-loans/getting-a-home-loan/cash-contribution
• Kiwibank, Home loan rates and fees (note on its four-year clawback): http://kiwibank.co.nz/personal-banking/home-loans/rates-and-fees/
• Reserve Bank of New Zealand, Loan-to-Value Ratio settings: https://www.rbnz.govt.nz/news-and-events/news/2026/08/reserve-bank-maintains-loan-to-value-ratio-settings
• Commerce Commission, Borrowing money or buying goods on credit (fact sheet, switching lenders): https://www.comcom.govt.nz/assets/pdf_file/0023/272408/Borrowing-money-or-buying-goods-on-credit-Fact-sheet-November-2021.pdf
• Consumer Protection (MBIE), Mortgages and home loans: https://www.consumerprotection.govt.nz/help-product-service/loans-and-debt/mortgages-and-home-loans
• Inland Revenue, Tax Technical, PUB00504: Income Tax, cash incentives for banking customers (draft item): https://taxtechnical.ird.govt.nz/-/media/project/ir/tt/pdfs/consultations/current-consultations/pub00504.pdf

Disclaimer

This article is general information about how mortgage cash back offers work in New Zealand. It is not financial advice, and it does not take your personal circumstances into account. Cash contribution offers, amounts and terms change frequently and differ between lenders; check the current offer and read the full terms, including any cash contribution agreement, before you apply or switch. If you need advice about your own situation, talk to a licensed financial adviser or mortgage adviser, and for tax questions, an accountant.