Key Post How to get 2% cash back if you are buying a house for cash

Discussion in 'Mortgages and buying and selling homes' started by Brendan Burgess, Jul 22, 2016.

  1. Brendan Burgess

    Brendan Burgess Founder

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    If you are in the fortunate position that you are able to buy a house for cash, take the "Sarenco Option".

    Take out as big a mortgage as possible with EBS.
    They give you 2% cash back without any conditions.
    Then pay back the mortgage.


    This is particularly useful if you are moving house and the proceeds of sale of your existing house will be enough to buy the new house. Up to now, you would probably have sold you own home first, rented for a while and then bought your new house. But with the Sarenco Option, you can now fund the purchase of your new home, move into it when you are ready, and then sell your own house. And EBS will actually pay you 2% of the mortgage value to do this!

    Forward planning
    You will need 20% of the value of the house to get a mortgage. So make sure not to use your "deposit" to pay down your existing mortgage.

    You will also have to make sure that you qualify for a mortgage in terms of income.

    Brendan
     
    PaddyW likes this.
  2. noproblem

    noproblem Frequent Poster

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    Is there a possibility the financial institution would have a charge for paying back the mortgage early?
     
  3. Sarenco

    Sarenco Frequent Poster

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    No, the Consumer Credit Act provides that a borrower may, at any time before the time agreed, repay to the mortgage lender the whole or any part of a housing loan and shall not be liable to pay any redemption fee in relation to the loan or any part of the loan.
     
  4. noproblem

    noproblem Frequent Poster

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    Thanks Sarenco, great deal, so long as the solicitor wouldn't take away whatever savings you might get. They're little devils you know?
     
  5. Sarenco

    Sarenco Frequent Poster

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    I'm not with you - why would you need a solicitor to pay off the mortgage?
     
  6. shweeney

    shweeney Frequent Poster

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    EBS will want to see your bank statements during the approval statement, if they see that you have the full cash amount sitting on deposit they may be reluctant to approve the mortgage - I'd be surprised if more than 1 person got away with this wheeze.
     
  7. T McGibney

    T McGibney Frequent Poster

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    I suspect this idea is in the "if it sounds too good to be true then it probably is..." category. It beggars belief that there is no fair usage policy or similar that would allow EBS to recoup a cashback payout if they felt it was being misused.
     
  8. Sarenco

    Sarenco Frequent Poster

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    A borrower is not under any obligation to provide all bank statements to a lender - there is no "good faith" requirement applicable to loan contracts.
     
  9. Sarenco

    Sarenco Frequent Poster

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    Here's the full list of T&Cs from their website:-

    "The following terms and conditions apply to the EBS 2% Back in Cash offer:

    • The amount we will pay to you is 2% of the amount of the mortgage loan that is drawn down.
    • It will be paid into the current account used for the mortgage repayment within two months of your mortgage loan being drawn down and you must have a valid SEPA Direct Debit set up on this account.
    • We may choose to extend the duration of the offer beyond the period 23rd of June 2016 to 31st of October 2016.
    • Self build mortgages will receive 2% of the amount drawn down at each stage of draw down. We will only pay you in relation to draw downs that happen within 18 months of the first drawdown. The first drawdown must occur during the term of this offer."

    Absolutely agree that it's a bonkers offer - up there with the Hoover free flights promotion back in the 90s.
     
  10. Monbretia

    Monbretia Frequent Poster

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    Is there definitely no condition on the loan offer clawing it back if the mortgage is redeemed within a set period?
     
  11. T McGibney

    T McGibney Frequent Poster

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    Thanks, but I'd be looking at the contract small print if I was considering this wheeze.
     
  12. twofor1

    twofor1 Frequent Poster

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    Has anyone seen the Back in Cash Application form ?

    Could there be any clawback T&c’s in it ?


    But am I eligible? Only if...

    • We receive a fully completed copy of the EBS 2% Back in Cash application form
      from you and this has been accepted by us………………………

    http://www.ebs.ie/mortgages/back-in-cash.html
     
  13. RichInSpirit

    RichInSpirit Frequent Poster

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    This sounds too good to be true. And probably is. It sounds a bit like the tracker mortgages where the banks wrote their terms and conditions in favour of the customer.
    I'm sure the terms and conditions will be altered very quickly if one or 2 people try this out.
    The taxman would also want his cut of the €2000 "profit"
     
  14. Sarenco

    Sarenco Frequent Poster

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    Last edited: Jul 25, 2016
    EBS have been quite explicit that there is no claw back.

    A spokeswoman said: "Customers do not have to stay with EBS in order to avoid a clawback on the 2pc. The bank is confident customers will stay to avail of its competitive rates."

    http://www.independent.ie/business/...third-lender-to-offer-cash-back-34825997.html

    I don't see why tax would become payable on any cash backs/rewards/loyalty discounts/bonuses.
     
    Last edited: Jul 25, 2016
  15. noproblem

    noproblem Frequent Poster

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    I'm not saying you would need a solicitor but when buying and getting everything in order for the bank i'd imagine the borrower had used a solicitor for searches, deeds, title, etc so i'd presume you would need one to get everything back from the institution in regard to paperwork and all the legalities, etc. I'll be amazed if someone doesn't try it, but equally amazed if they get it to work without costs.
     
  16. Sarenco

    Sarenco Frequent Poster

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    Ah, I see where you are coming from now.

    The costs associated with registering a discharged mortgage are trivial - this article gives a good summary of what's involved:-

    http://www.irishtimes.com/business/what-happens-after-the-last-mortgage-payment-1.1111228
     
  17. John Locke

    John Locke Registered User

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    I'm doing something similar with Bank of Ireland, although only with a portion of the loan. They have a clawback if you repay more than 50% in 5 years.
    I intend to make a lump sum payment of ~25% of the principal as soon as we have sold our old house. I collected 2% of this amount upfront from BOI.

    I will have paid a bit more than 2% in interest on this portion of the loan by the time I pay it back, but the effective interest rate for the duration for this portion of the loan will be very low.
    So, for me, I'm not making a profit, but it provides cheap finance for the period between our purchase and sale. It meant we could stay in our old home while the new house was being renovated.
     
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  18. Sarenco

    Sarenco Frequent Poster

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    Which presumably means you avoid the cost (and hassle) of having to rent somewhere in the intervening period.
     
    John Locke likes this.
  19. Brendan Burgess

    Brendan Burgess Founder

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    Why not do it with EBS?

    You can pay as much back as you wish.
    The interest rate is much lower.
    You can switch to another lender if rates come down.

    There is absolutely no reason at all for anyone to take out a mortgage with Bank of Ireland unless they are refused by EBS.
     
    Max Johnson likes this.
  20. John Locke

    John Locke Registered User

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    I took the loan out in December.

    Agreed.

    Yep.