No Clawback on mortgage cash back offers ?

Nika Bolokov

Hi All,

I read this in todays Independent ?

http://www.independent.ie/business/personal-finance/latest-news/bank-of-ireland-to-pay-customers-4500-to-take-out-150000-mortgage-35003874.html

But the bank has been forced to drop the claw-back threat after this was banned under an EU directive that was introduced earlier this year.

First time Ive heard anything about that would anybody know if thats true ?

Thanks !

Michael D Not Higgins

It does appear that they have removed the clawback term from their deal. Interesting one to keep an eye on.

SarahMollie

This is really interesting. Does anyone knows if this ruling applies retrospectivly? I'm with BOI and I availed of the offer at the beginning of last year. So in my head that meant that I was going to be with BOI for approx another 3.5 years.

I wonder if this would let me switch sooner (I've about 18months left on a fixed rate) and with the promise of new lenders coming in at 2% ish rates, it would be great if I had that option open to me to move 2 years sooner than planned.

Even if I didnt move, the threat of being able to take my business elsewhere should motivate them to offer a better variable rate anyhow!

Prefect_1998

SarahMollie wrote: »

This is really interesting. Does anyone knows if this ruling applies retrospectivly? I'm with BOI and I availed of the offer at the beginning of last year. So in my head that meant that I was going to be with BOI for approx another 3.5 years.

I wonder if this would let me switch sooner (I've about 18months left on a fixed rate) and with the promise of new lenders coming in at 2% ish rates, it would be great if I had that option open to me to move 2 years sooner than planned.

Even if I didnt move, the threat of being able to take my business elsewhere should motivate them to offer a better variable rate anyhow!

we are in the same boat, our first payment is start of Sep, i called them and the 1% in 5 years will not apply to us.

But the option to change provider is very interesting.

SarahMollie

danielle_door wrote: »

we are in the same boat, our first payment is start of Sep, i called them and the 1% in 5 years will not apply to us.

But the option to change provider is very interesting.

TBF I don't care about the 1% in 5 years (although obv unexpected money is nice)- its the ability to switch up to 2 years early that would be really attractive to me!

Michael D Not Higgins

SarahMollie wrote: »

TBF I don't care about the 1% in 5 years (although obv unexpected money is nice)- its the ability to switch up to 2 years early that would be really attractive to me!

Make sure to calculate if it's actually worth leaving. The savings in interest could be taken up with the costs involved in the switch.

SarahMollie

Michael D Not Higgins wrote: »

Make sure to calculate if it's actually worth leaving. The savings in interest could be taken up with the costs involved in the switch.

Yes of course, I'd have to do my research. But even the fact that I'd no longer be tied to them should make it easier to get to a better rate once my fixed term is over.

Also, once people like myself become available to other lenders looking to take market share, there might be offers like paying switching costs (I know these were popular about 10 years ago - albeit different times).

Does anyone know how much switching normally costs in fees? Is it a flat rate from your solicitor or a % of the value of the loan?

L1011

Without clawback, its likely these deals will vanish for future customers. Hopefully banks start competing on rates, not gimmicks now.

Prefect_1998

Nika Bolokov wrote: »

Hi All,

I read this in todays Independent ?

http://www.independent.ie/business/personal-finance/latest-news/bank-of-ireland-to-pay-customers-4500-to-take-out-150000-mortgage-35003874.html

But the bank has been forced to drop the claw-back threat after this was banned under an EU directive that was introduced earlier this year.

First time Ive heard anything about that would anybody know if thats true ?

Thanks !

does this void current mortgage contracts , in relation to claw back or only to new drawdowns ?

Nika Bolokov

I haven't a clue but like many posters if this is true I'd like to switch banks.

Has anyone asked them what the story is ?

griffzinho

Any definitive answer on this please?

Are the clawbacks illegal? and like other posters I signed up with BOI 18 months ago for 1% cashback and would like the opportunity to change to avail of lower rates.

athtrasna

griffzinho wrote: »

Any definitive answer on this please?

Are the clawbacks illegal? and like other posters I signed up with BOI 18 months ago for 1% cashback and would like the opportunity to change to avail of lower rates.

If you're in a hurry talk to a solicitor? Legal advice cannot be given on boards.

radharc

It's not really in the bank's interest to clarify the situation. I see it was only mentioned in passing in the Indo article, a Google search doesn't show up any original reporting of the alleged EU decision either.

radharc

L1011 wrote: »

Without clawback, its likely these deals will vanish for future customers. Hopefully banks start competing on rates, not gimmicks now.

EBS never had a clawback and no sign of their offer vanishing.

Also the 'gimmick' offers real value that in some cases more than makes up for any difference in rates. Frustrating for existing mortgage holders I agree.

griffzinho

athtrasna wrote: »

If you're in a hurry talk to a solicitor? Legal advice cannot be given on boards.

It's not exactly legal advice is it? Boards.ie exists for information sharing as well if I am not mistaken. It is asking if anyone knows in general through dealing with the banks following Charlie Westons article. So I ask again (same as others) has anyone contacted the banks or have more information on this? I'm sure it will become known without anyone having to pay a solicitor for the privilege.

The_Conductor

griffzinho wrote: »

Any definitive answer on this please?

Are the clawbacks illegal? and like other posters I signed up with BOI 18 months ago for 1% cashback and would like the opportunity to change to avail of lower rates.

BOI have been found to be in breach of the Financial Services Directive by threatening the clawback- and rather than challenging the EU Directive- choose to add an inducement for customers who stay the 5 year term- aka you get an additional 1% cashback after 5 years- alongside the original 2% cashback.......

You will probably have to contact your local mortgage manager to have these terms added to your account- as its improbable that they would automatically add it to your account (given the sums involved).

Its an additional inducement to stay the 5 years- without a threat of a clawback on the original 2% cashback, if you do not.

What is being looked at by the Central Bank- is including cash-back or other inducements- as part of deposit rules- aka 2% cashback on a mortgage = a 2% higher deposit requirement- that is the more likely outcome of all of this- than is the institutions competing on price.

Ring your mortgage manager and advise that you want written clarity on this.

stripeycoaster

Charlie Weston was probably referring to SI 142 of 2016 EUROPEAN UNION (CONSUMER MORTGAGE CREDIT AGREEMENTS) REGULATIONS 2016 [can't post a link, but you can find it it on the Dept. of Finance website or the Irishstatutebook.ie].

There is a section on p. 30 of the SI on 'early repayment', which states that sanctions cannot be imposed for early repayment.

matrim

I rang today to query if this would apply to us as we haven't drawn down yet. We were told that the extra 1% will apply for all new mortgages starting from 1st September. But they did seem to imply that it is only if one of the applicants is an existing BoI customer

The_Conductor

matrim wrote: »

I rang today to query if this would apply to us as we haven't drawn down yet. We were told that the extra 1% will apply for all new mortgages starting from 1st September. But they did seem to imply that it is only if one of the applicants is an existing BoI customer

Its their prerogative whether they have stipulations such as this on it, or not...... Its worth far more to them, as a bank- to have all your banking- rather than just your mortgage.

Earleybird

Has anyone considered switching from one to another to take advantage of each cashback? Assuming the offers remain with the 3 institutions currently offering it could prove worthwhile to switch a few times before settling on the one with the best rate.

The_Conductor

Earleybird wrote: »

Has anyone considered switching from one to another to take advantage of each cashback? Assuming the offers remain with the 3 institutions currently offering it could prove worthwhile to switch a few times before settling on the one with the best rate.

The legal fees involved would eat the vast bulk of the value of the cashback incentive (it can cost up to 2k to process a mortgage fully (attaching a lien to it etc)). At the moment lenders very often cover the legal aspect of the transaction- however, I think you'd find that the legal bill would be the first thing to fall by the wayside- were people to use the schemes in the manner in which you're suggesting.

It sounds like a great idea in theory- and indeed there is nothing wrong with it per se- however, lenders would wise up damn quick, and while the headline deals might still be available, they'd sure as hell find ways to tie you in by other means..........

If they would ever just compete on interest rates- like most sane people want them to- in the long run it would be to all our benefits.........

Alkers

Has anyone gone through with this yet? You could bounce between PTSB, EBS and BOI and get yourself a sizeable lump sum?

Zzippy

Simona1986 wrote: »

Has anyone gone through with this yet? You could bounce between PTSB, EBS and BOI and get yourself a sizeable lump sum?

Maybe if you were a solicitor and could do the legal work yourself... prob worth it for most people to just move for the best interest rate they can get, more savings in the longer term.

SarahMollie

I'd be more interested to find out if anyone has any experience of walking away from their current lender wtihin the "clawback period" which is typically 5 years I think.

I'm fixed for another 18 months or so, so I can't test it yet unfortunately, but I'd love to be able to shop around after that and not wait an additional 2 years.

Cyrus

Zzippy wrote: »

Maybe if you were a solicitor and could do the legal work yourself... prob worth it for most people to just move for the best interest rate they can get, more savings in the longer term.

really depends on the size of the mortgage,

say you have a 500k mortgage, thats 10k each time, against 2k legal fees :cool:

Earleybird

SarahMollie wrote: »

I'd be more interested to find out if anyone has any experience of walking away from their current lender wtihin the "clawback period" which is typically 5 years I think.

I'm fixed for another 18 months or so, so I can't test it yet unfortunately, but I'd love to be able to shop around after that and not wait an additional 2 years.

The banks are not allowed clawback.

The Mulk

Cyrus wrote: »

really depends on the size of the mortgage,

say you have a 500k mortgage, thats 10k each time, against 2k legal fees :cool:

Yeah I was thinking, 250k from PTSB 5k cash back,(fees not included as would be paying these anyway)
1 year new business at 3.2 %
Next year BOI approx. 4,900 back and fixed at 3.1 % for 3 years, 1 k switching fees.
I'd say solicitors will cop on to this and have a fixed charge for switching.

Cyrus

The Mulk wrote: »

Yeah I was thinking, 250k from PTSB 5k cash back,(fees not included as would be paying these anyway)
1 year new business at 3.2 %
Next year BOI approx. 4,900 back and fixed at 3.1 % for 3 years, 1 k switching fees.
I'd say solicitors will cop on to this and have a fixed charge for switching.

dont ptsb still have a clawback clause?

The Mulk

Cyrus wrote: »

dont ptsb still have a clawback clause?

i don't think any bank is allowed clawback, hence the reason for BOI sweetener after 5 years.
I could be wrong, that's just my understanding. I'm not sure whether PTSB have an early payback penalty, they seem more unsure of the regulations than their customers.

Cyrus

The Mulk wrote: »

i don't think any bank is allowed clawback, hence the reason for BOI sweetener after 5 years.
I could be wrong, that's just my understanding. I'm not sure whether PTSB have an early payback penalty, they seem more unsure of the regulations than their customers.

PTSB havent officially said anything as far as i know, so i wouldnt risk it

The Mulk

Cyrus wrote: »

PTSB havent officially said anything as far as i know, so i wouldnt risk it

It's been taken out of their terms and conditions under the cash back deal.(just checked and couldn't see it)
I'm 10 months away from considering it though
I'd like to change for a better rate when the year is up but i'll see whats on offer at the time.