Does the ANZ Qantas home loan promotion add up?
300,000 bonus points sounds tempting, but you'll pay a hefty price for them.
ANZ and Qantas are currently running a cheesy campaign featuring David Hasselhoff to promote a home loan that offers bonus Qantas Points. I'm not here to judge the Hoff, but I am here to judge whether points deals are worth taking up.
This is actually very similar to a promotion that ANZ ran with Qantas last year. When I crunched the numbers on that one, it turned out that the extra amount paid in interest was so high that the bonus points were not worth it. Is that going to be the case again?
This campaign promises 300,000 bonus Qantas Points for an ANZ home loan of $300,000 or more. For the sake of comparison, I'm assuming I'm borrowing $300,000 over 25 years on an ANZ Standard Variable loan with monthly repayments. The current rate for that is 5.18% per annum.
Plugging those figures into Finder's home loan calculator, the total amount of interest due over the term of the loan would be $235,612.58.
What would happen with a cheaper loan? Right now, for instance, Athena has a 3.09% p.a. variable rate. Putting that figure into our calculator with the same assumptions, the total interest payable is $131,015.07.
In effect, you're paying $104,597.51 to acquire 300,000 Qantas Points. That means each batch of 1,000 points has cost you $348.66.
Our golden rule at Points Finder is that when redeeming points, you should get at least $20 worth of value for every 1,000 points. With the right kind of redemptions, that figure can go up as high as $50. But there is literally no way in the world that you can redeem those points in a way that will get you $350 in value for each 1,000 points, which is what you'll be paying with the ANZ deal. It won't be possible even to just break even.
A simple example to reinforce this: a return business class flight to the UK on Qantas will currently use 256,000 Qantas Points. If you didn't shop around, you might pay $10,000 for that ticket. You could use the majority of the points you earned through the home loan to pay for it instead, but remember, those points cost you at least $100,000 in extra interest. It simply doesn't make sense, even allowing for scenarios such as refinancing to a lower rate in the future.
Choosing a home loan is a major decision, and you need to compare thoroughly before signing up. Ultimately, the amount of interest and fees you pay are what matters, not bonuses like frequent flyer points.
Angus Kidman's Findings column looks at new developments and research that help you save money, make wise decisions and enjoy your life more. It appears regularly on Finder.