Cashback worth considering?

delta_bravo

New Member
Messages
1
Hi,

In the process of looking at First Time Buyer mortgages, particularly KBC, EBS, PTSB

We are looking at a 5 year fixed initially and from following general advice I was told to focus on the APRC and dont be fooled by cashback teasers as they are dearer in the long run. However after doing a few calculations I'm a bit confused. When these comparisons are done they often assume your rate for the entire term of the mortgage and dont consider the option of switching after the 5 years end.

For example

House Value - 500k
Mortgage - 400k
LTV 80%
Term 30 years

KBC has the cheapest 5 year fixed at 2.65% with monthly repayments of €1,611.86
PTSB comes in 2nd at 2.9% with monthly repayments of €1,664.92
EBS next at 3% with monthly repayments of €1,686.42

So those are the flat rates.

However there are the cashback amounts to consider. If I factor them into the monthly repayments (which I know you probably wouldnt actually use in many cases to pay for the mortgage)

KBC - No cashback €1611.86 flat
PTSB - 2% cashback 8k & 2% on monthly payment via explore account. Which works out at €133 pm plus €33.29pm so a combined €166.29
EBS - 2% Lump cashback worth €133 pm + after 5 years 1% final lump worth 66pm = €199 pm

So to me both PTSB and EBS are better offers than KBC for the five years because the cashback if counted brings their monthly figures below KBC for the 5 year term. I realise that their rates are much higher so if you stayed on this rate for the full 30 years that KBC would be far better but to me thats not a fair comparison as who knows what rates will be there in 5 years? It would all depend on what is available in 5 years.

Am I missing something here?
 

RedOnion

Frequent Poster
Messages
3,133
I was told to focus on the APRC
APRC is effectively meaningless on mortgages. The assumption in calculating is that mortgage will revert to SVR, so a bank with a high SVR will have a high APRC.

Have a look at the 'best buys' threads where we've tried to factor in the cashback, and calculate an effective interest rate over 3 years.
 
Top