2% Cashback Offer - No Brainer

D

Dunnepaj

Registered User
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Hi there.

We have just gone sale agreed and am now considering which loan offer to take. Have approval for 600k from KBC, Per TSB and EBS. They all have slightly different variable and fixed rates. I'm considering going fully variable with Per TSB. There is a difference in variable rates of 0.25% with KBC cheaper. EBS are more expensive again so am ruling them out.

However we would get 12k cashback with TSB and it seems that there are no terms and conditions, so what is stopping us from switching to the then cheapest variable rate provider in the market say after one year? The risk is that the new lender won't approve us for 600k but I think that risk isn't too high. Over one year the repayments will be circa 750 higher with TSB over KBC but we'll get 12k cash back.

Even if we went for a 2 or 3 year fixed rate, the maths would seem to make sense.

Am I missing something?
 
Yes, you are missing permanent tsb's long history of mistreating customers regarding the interest rate. You should not assume that you will be able to switch. Your circumstances may change. Lenders' policies may change. Lenders may be unwilling to take someone who has just taken out a mortgage with another lender recently. And, you know what? You might just be too busy to get around to doing the paperwork to switch mortgages.

You may also be missing something on interest rates. According to my Best Buys table, EBS is cheaper than ptsb at all LTVs? Where are you getting the rates?



Brendan
 
Hi Dunnepaj,

I'm currently undertaking a switch based on similar logic, in my case I'm actually moving from a lower rate to a higher rate to avail of the 2% cashback. The only risks I can see are 1.) as you've stated if a new lender won't approve you for what you need due to a change of circumstances, etc. and 2.) a new lender won't approve you based on length of time with your current lender.

I'm interested to learn if/how a new lender can see how long you've been with your current lender? During my current switch my potential new lender asked for a recent mortgage statement. The only one I receive is annual so I provided that. I'm sure I could request a 6 monthly one if I'd only been with my current lender 6 months, in which case would this infer anything to my new lender?
 
An ICB will show if it's less than 2 years, might even have further info on date wise, I can't remember exactly the format.
 
Thanks Monbretia. Possibly a stupid question but is an ICB standard practice by all banks when evaluating a potential new customer, switcher or otherwise?
 
Hi @Dunnepaj I am wondering why you would rule out EBS and not PTSB. There offer and rates are the same, yet as @Brendan Burgess pointed out, if history is anything to go by PTSB may not pass on rate cuts to existing customers. Have you done the maths regarding the cashback? a .2% lower interest rate works out the same (as near as makes no difference) as what you get back from a 2% cashback offer (see Variable mortgage rates - best buys thread)

@Brendan Burgess PTSB have 0.5% rate reduction for the first year for first time buyers. So rates are equivalent to EBS's. @Dunnepaj would want to switch pretty sharpish after that. (see PTSB website)
 
Absolutely, all lenders will carry out an ICB on new lending, even for a current account!
 
Thanks Monbretia, that answers that then!
So any potential future lenders view on how long you've been with current lender or even how many times you've previously switched is a factor, particularly if you've been with current lender for < 2 years.
 
Brendan Burgess said:
OK, so they are the same for the first year, but much more expensive after that.
Click to expand...
Yes - that is why I am confused as to why the OP decided to rule out EBS. The interest rates are the same (after the .5% reduction from PTSB), but the OP will be in a much worse position (all other things being equal) if they are unable to switch in a year's time.
 
Brendan - I'm not so sure about your rates. Here's what I have

KBC Permo EBS
Variable 3.05 3.80 3.50
3 Yr Fixed 2.95 3.10 3.65
5 Yr Fixed 3.00 3.20 3.80
 
Obviously the fixed rates don't apply if you are going to switch after one year.

What LTV are you?

I think my rates are right, but do let me know if they are wrong.

Brendan
 
Brendan

I've doubled checked and I think the rates I quoted are right.

My LTV is 55%.

I've also reconsidered the options as repayments will be tight so I am actually considering a 3 yr fixed rate for peace of mind. I never thought I would say that but at 3.2% with Permo, this seems ok as I believe that ECB will raise raise a few notches within three years. I would then plan to switch to the then cheapest provider and given that timeframe I am assuming the ICB point (raised by Monbretia) won't apply. I take the other points that have been raised on circumstances changing etc but I am happy to take that risk.

Based on my calculations, the monthly repayments differ (between KBC and Permo) by €48 per month or €1,728 over the three years yet we will be getting 12k cashback from Permo on Day 1.

What am I missing in this scenario?
 
Yes it does now Sarenco on the variable. I was previously taking the discounted Permo variable rate of 3.3 but that's only for the first year so the Permo variable rate at 3.8 is not competitive. I'm just reconsidering the Permo fixed rates now though which seem competitive on a relative basis but EBS are not.
 
Appreciate the points Brendan and agree that rates are inflated but do we really think we'll see new entrants into the market and for them to cut rates aggressively?

Why wouldn't we be able to switch assuming circumstances remained the same and mortgage criteria also remained static.....big if's I know.

Just on the variable point. There is a difference of 0.45 between KBC and EBS. I think that is meaningful if you decide to stay variable. Yes I would get 12k cash immediately but after 7 years, I would then be paying an extra €144 per month assuming the variable rate difference stays the same. Why would I consider EBS based on this scenario?
 
KBC does not pass on cuts to existing customers, so they should be avoided until they change this policy.

While there is no guarantee that EBS will pass on cuts, and while they may try to recoup the 2% by not doing so, I mistrust them a lot less than KBC.

Not sure where the 7 years is coming from.

Take your 2% from EBS and if they don't pass on rate cuts, then switch to another lender.

Brendan
 
Thanks Brendan

The 7 years is 144*12*7 is circa 12k so if I go variable with EBS the cash back benefit is neutralised between KBC and EBS after 7 years. The 144 is the difference in monthly repayments between KBC's variable and EBS's variable. Do you think we'll see further cuts to rates in the coming years despite the likelihood of ECB rate rises?

Do I take it that you would have zero appetite to fix even a potion because that is where Permo might come into the equation as their fixed rates are lower than EBS.
 
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