BOI to pay stamp duty for first-time buyers

morrigan2014

Very interesting development! Incentized lending again....

http://www.independent.ie/business/personal-finance/bank-of-ireland-to-pay-stamp-duty-for-firsttime-buyers-30148751.html
BANK of Ireland is to pay the stamp duty on property purchases for first-time buyers.

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The move has echoes of the boom when loose lending and incentives meant people overpaid for homes, experts said.
The bank said it will refund stamp duty to new buyers, equivalent to 1pc of their mortgage amount for drawdowns up to the end of September this year.
This would mean a refund of €2,000 on a €200,000 mortgage.
This means it is one of the most attractive incentives in the market at the moment.
Other lenders are prepared to pay the home insurance of new buyers for the first year, a figures unlikely to be more than €300.
The bank said it has provided more than €2bn in mortgage approvals under its first-time buyer and mover fund launched in October 2012 and has an additional €2 billion fund available to meet current and anticipated demand.
Aine McCleary, Bank of Ireland’s Head of Mortgages RoI said: “Bank of Ireland is very keen to support first-time buyers who are looking to purchase their first home.”
It said it was see demand for mortgages from all parts of the country, particularly now as property prices have stabilised outside Dublin.”
However, Karl Deeter of Irish Mortgage Brokers said: “That a bank is willing to pay a persons stamp duty has the hallmarks of the kind of thing we used to see in the run up to the boom.
“Clawing back lost market share in this manner would be better served by giving people greater choice as opposed to paying them off.”

McGrath5

What is the catch?

As always, the devil is in the detail.

gmisk

The BOI rates arent great....maybe they should do something about that instead...

Conor20

Maths time...
BOI's current variable rate to new customers is 4.5%. They pay the stamp duty as an incentive.
KBC's LTV < 80% rate is 3.99%. They pay the first year's house insurance as an incentive.


Say someone borrows 300k over 30 years, the total repayments are:
BOI: 547,220.13 - Stamp Duty of 3k = total payment of 544,220.13
KBC: 514,986.08 - 1 year house insurance of 300 = total payment of 514,686.08

Looks like unless the principle of the mortgage is low, a better rate beats the incentive of the bank paying the stamp duty.

gmisk

How do AIB compare to that?
I thought there rates were slightly better?

pacman1989

I think that's a very good incentive. I have been mortgage approved from boi and am looking for a home. 2000 more in my pocket at the end of the day. Its also worth noting that while other banks may offer better rates boi seem to give out the highest mortgage values. I got approval of 200 with boi while other banks were quoting around 160-170. That might just in my case and different for other applications.

jmayo

gmisk wrote: »

How do AIB compare to that?
I thought there rates were slightly better?

Yeah they are way better.
They eventually chop half the amount owed off and let you keep the gaff.

xper

pacman1989 wrote: »

...2000 more in my pocket at the end of the day...

which will probably be eaten up and more by the increased asking prices sellers will now look for because "sure , the bank's paying the stamp duty for them".

... I got approval of 200 with boi while other banks were quoting around 160-170. That might just in my case and different for other applications.

You have, of course, asked yourself the question as to why one bank thinks you can manage a debt 25% bigger than other banks do. Or are you into historical reenactment?;)

pacman1989

xper wrote: »

which will probably be eaten up and more by the increased asking prices sellers will now look for because "sure , the bank's paying the stamp duty for them".
If a seller said that to me i would laugh and walk away. I dont think this was happening much when there was a relief for ftb before so why should it start now. A lot of houses granted are selling a bit quicker than they were a few years ago but i have a feeling things will start to slow down a bit this year when all the cash buyers have had there pick of the bunch and the market has stabilised more.

You have, of course, asked yourself the question as to why one bank thinks you can manage a debt 25% bigger than other banks do. Or are you into historical reenactment?;)

I can quite comfortably afford to pay back the mortgage repayment. Myself and my partner have been paying 900 p/m last 2 years and in that space of time saved 25k also so ya your comment does not apply in my case.
I know for many others they may stretch there means but we are lucky to be in a position where by if one of us lost our job the other could still afford mortgage and all other associated cost.
My opinion on this is that other lenders are still a bit hesitant to lend what they should be in fear of a repeat of past mistakes.

ted1

pacman1989 wrote: »

I think that's a very good incentive. I have been mortgage approved from boi and am looking for a home. 2000 more in my pocket at the end of the day. Its also worth noting that while other banks may offer better rates boi seem to give out the highest mortgage values. I got approval of 200 with boi while other banks were quoting around 160-170. That might just in my case and different for other applications.

expect the taxman to come looking for his share of the 2k stamp duty being gifted to you by BOI. at approval for 200K the tax your in the higher bracket so will have a tax liability of about €1,100

pacman1989

ted1 wrote: »

expect the taxman to come looking for his share of the 2k stamp duty being gifted to you by BOI. at approval for 200K the tax your in the higher bracket so will have a tax liability of about €1,100

I am approved for 200 but prob won't go that high the most I feel comfortable going to Is 190 and if going to 200 could you not go to 199 and be liable for less tax.
I'm not sure about this just a guess

Valetta

ted1 wrote: »

expect the taxman to come looking for his share of the 2k stamp duty being gifted to you by BOI. at approval for 200K the tax your in the higher bracket so will have a tax liability of about €1,100

That was my first thought.

However, you can receive an annual gift from a non-related person to the value of €3,000 without any tax liability.

ted1

Valetta wrote: »

That was my first thought.

However, you can receive an annual gift from a non-related person to the value of €3,000 without any tax liability.

Really, good to know.

can a bonus from a company be classed as a gift?

Valetta

ted1 wrote: »

Really, good to know.

can a bonus from a company be classed as a gift?

I doubt it very much, as it would be deemed to be earned income.

P. Breathnach

Measures that put money in the hands of potential purchasers enable them to increase their offers on property, driving prices up.

The beneficiaries of such measures are the vendors.

pacman1989

P. Breathnach wrote: »

Measures that put money in the hands of potential purchasers enable them to increase their offers on property, driving prices up.

The beneficiaries of such measures are the vendors.

Dont you get the money back at the end of th 1st year paying the mortgage. Therefore its not money in your hands at the time of purchase so in my opinion should not and will not have a bearing in the negotiations for a property.

P. Breathnach

pacman1989 wrote: »

Dont you get the money back at the end of th 1st year paying the mortgage. Therefore its not money in your hands at the time of purchase so in my opinion should not and will not have a bearing in the negotiations for a property.

If it works that way, it's simply a cash-flow issue for purchasers. They can borrow in the assured expectation of receiving money in a year's time.

Sleepy

Wonder whether they've a claw-back clause should you re-mortgage the property with another lender 6 months down the line?

who_ru

It is totally wrong in my view for a bank to introduce such a blatant measure to stimulate demand in a market that's starved of supply. Only one outcome, higher prices to buyers.

I presume they ran this by the financial regulator. No problems there. Rents in Dublin now near bubble territory, house prices headed that way too. And not a squeak out of a single minister or govt TD.

worded

who_ru wrote: »

It is totally wrong in my view for a bank to introduce such a blatant measure to stimulate demand in a market that's starved of supply. Only one outcome, higher prices to buyers.

I presume they ran this by the financial regulator. No problems there. Rents in Dublin now near bubble territory, house prices headed that way too. And not a squeak out of a single minister or govt TD.

No bank bailout Needed so vested interests are happy. The lost generation are fcuked

who_ru

Conor20 wrote: »

Maths time...
BOI's current variable rate to new customers is 4.5%. They pay the stamp duty as an incentive.
KBC's LTV < 80% rate is 3.99%. They pay the first year's house insurance as an incentive.


Say someone borrows 300k over 30 years, the total repayments are:
BOI: 547,220.13 - Stamp Duty of 3k = total payment of 544,220.13
KBC: 514,986.08 - 1 year house insurance of 300 = total payment of 514,686.08

Looks like unless the principle of the mortgage is low, a better rate beats the incentive of the bank paying the stamp duty.

BOI would prefer if you did not post your calculations on a popular Internet forum in the manner that you have as others might learn from it and avoid the trap.