PTSB Mortgage holders to get 10pc bonus for paying lump sum off trackers

Brendan Burgess

Founder
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41,033
A 10 per cent bonus on all trackers - homes and buy to lets

Multiples of €5,000

You can pay as much as you like ( it was initially limited to 50%)

No requirement to come off your tracker

Arrears must be cleared first.

Deadline: June 17th - could be earlier if €500m is subscribed for.

Conditions
There is a clawback if you pay off your mortgage within 6 months Not sure if this still applies

You must maintain your current level of repayments i.e. the term of the loan will be reduced.
 

Brendan Burgess

Founder
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41,033
Is this good value?

In this Key Post, I worked out that the discount for someone on a 20 year tracker at ECB + 1% should be around 3.7% to make it attractive to the borrower.

However, it is worth around 23% to the lender.

So 10% is somewhere in between.

It is more attractive if...
You haven't long to go on your mortgage.
You expect to be paying off your mortgage anyway, because you expect to move.
You are in negative equity and you want to eliminate it as quickly as possible
You are worried about the safety of your deposit


It is less attractive if...
You have a buy to let mortgage (because you get tax relief)
You have a very cheap tracker
you have a very long mortgage
You have an interest only mortgage
you have other more expensive borrowings e.g. credit card debt (but you shouldn't have a lump sum available so)
you may need to borrow money again in the near future. It will cost far more than 2%,

The big question is whether the offer will be improved or withdrawn
 

horusd

Frequent Poster
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1,604
Shoot, I paid off €7500 grand up front,over last few years. I don't have much left on it, 'bout 30K. I wonder if they will (a)reach the 500 Million, (b) extend offer to regular overpayments? The latter offer would interest me.
 

Howitzer

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1,459
The big question is whether the offer will be improved or withdrawn
I think it's a no brainer. This is the only qualm I'd have about paying a really big chunk. If you're on +ECB <1% and had a lump some lying around I'd use about half on this and hold the rest in case a bigger offer is made on a case by case basis.
 

Fatphrog

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161
A bigger question for a lot of people is whether the other main lenders will be following suit.
 

Brendan Burgess

Founder
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41,033
I think it's a no brainer. This is the only qualm I'd have about paying a really big chunk. If you're on +ECB <1% and had a lump some lying around I'd use about half on this and hold the rest in case a bigger offer is made on a case by case basis.
My gut feeling is that the top guys in PTSB will be replaced by a new team. And they will aggressively deleverage.

So I like the idea of taking up some part of it now and keeping the balance in reserve.

However, if I was in negative equity, and I could get rid of all or most of it with this, I would be very tempted, especially if I was thinking of moving on in the medium term.
 

OMD

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30
However, if I was in negative equity, and I could get rid of all or most of it with this, I would be very tempted, especially if I was thinking of moving on in the medium term.
Why would it make a difference if you were in negative equity or not? Seems pretty irrelevant to me. It is either a good deal for you or not. Negative equity or not does not make a blind bit of difference
 

Complainer

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4,951
I think it's a no brainer. This is the only qualm I'd have about paying a really big chunk. If you're on +ECB <1% and had a lump some lying around I'd use about half on this and hold the rest in case a bigger offer is made on a case by case basis.
The risk of course is that there won't be any further offer - better or worse, and you risk losing the premium entirely.
 

Howitzer

Frequent Poster
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1,459
The person I'm thinking of in particular has ECB +.75% and 3.5 years remaining with first time buyer mortgage interest relief. This is probably the type of person with the most humming and hawing to do (assuming you have the cash).

The higher the tracker and lower amount of years mortgage interest relief remaining the bigger the no brainer and proportion of your available lump sum should be payed off. IMO.

Complainer, I personally would grab the deal with both hands. It's a bigger bonus than I thought would be offered with no catches that I can see.
 

daymoh

Frequent Poster
Messages
51
Will mortgage holders be liable for any tax on the amount which is contributed by bank? I'm wondering if this is being treated as a capital gain?
 

Brendan Burgess

Founder
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41,033
Why would it make a difference if you were in negative equity or not? Seems pretty irrelevant to me. It is either a good deal for you or not. Negative equity or not does not make a blind bit of difference
Hi OMD

I think it does. If you are in negative equity, you feel very restricted. You can't sell your house without the lender's permission. You probably can't trade up.

If I was in negative equity, my first priority would be to eliminate it as quickly as possible. This bonus speeds up the process, so I would be very tempted.

If I had loads of equity, I could afford to take a chance that the deal might be improved. If I pass on it this time, and the deal is withdrawn, then I will be disappointed, but I can live with it.

Against that, I think that the banks should be giving incentives to those in negative equity, tracker or not, to reduce the negative equity as it makes the banks' credit risk a lot better. So it might be worth waiting.
 

serotoninsid

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1,755
Will mortgage holders be liable for any tax on the amount which is contributed by bank? I'm wondering if this is being treated as a capital gain?
Good point -can anyone clarify?

Fatphrog said:
A bigger question for a lot of people is whether the other main lenders will be following suit.
Yep - particular interest in NIB and whether they're likely to go down this road?

I'm on ECB+0.59% but with the unknown outcome to all this, I have not been able to make up my mind and move (..my meager but nonetheless hard earned..) savings - but this would solve the problem. I think this (savings risk) can be factored into peoples decision on whether folks take up this deal or not?
 

Greekwife

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Messages
45
What if you had 25 years left on current mortgage (ECB +1%) - not in NE (yet) but knew you wanted to move across the country as soon as the economy picks up again (or get a permanent job there) and knew that you would need a new mortgage to build (on existing site) and may not be able to sell the existing house quickly and so may become a "reluctant landlord". Have been saving towards this goal. Also down to 1 salary for the family so not in the same position as was getting the existing mortgage.
 

DB74

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Messages
1,632
What if you had 25 years left on current mortgage (ECB +1%) - not in NE (yet) but knew you wanted to move across the country as soon as the economy picks up again (or get a permanent job there) and knew that you would need a new mortgage to build (on existing site) and may not be able to sell the existing house quickly and so may become a "reluctant landlord". Have been saving towards this goal. Also down to 1 salary for the family so not in the same position as was getting the existing mortgage.

If you know that you will be clearing the mortgage anyway in the near future then I would pay down as much as possible to get as much of the 10% bonus as you possibly can.
 

Panacea

Frequent Poster
Messages
104
Our mortgage is not with PTSB but at least it is interesting to see progress being made in terms of recognising the need to put a more realistic approach in place if they really want to address the difference between their cost of funds and the rates some people have on mortgages for up to 30+ years ...... but still quite a bit away from being at a compelling offer.
 

Greekwife

Frequent Poster
Messages
45
If you know that you will be clearing the mortgage anyway in the near future then I would pay down as much as possible to get as much of the 10% bonus as you possibly can.
Am not sure we would be clearing the mortgage. Am worried that paying in a lump sum now would leave us with v little savings and in the event of us not being able to sell then we would have no deposit to start the build and would not be able to get enough of a mortgage to build whereas if we held onto our savings we would have a head start on the build.

Also if we pay a lump sum off now and then have to re-borrow that amount at a much higher interest rate in order to fund the build is it worth it ?
 
J

johnobee

Guest
Anyone know if Bank of scotland are offering similar reductions?
 

Brendan Burgess

Founder
Messages
41,033
I have just done an interview for Drivetime and Philip Boucher-Hayes asked me, on the spot, to predict how many people will take advantage of this.

I predicted that 10% of those on tracker mortgages will go for it. So around 7,000 people. Does that seem about right? It's really impossible to predict,especially if people hold off hoping for a better deal.

Brendan
 
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