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.

SarahMollie

Earleybird wrote: »

The banks are not allowed clawback.

Yes I know, but I've not seen the Banks acknowledge this anywhere, so it would be good to know if someone here had managed to switch in real life.

Cyrus wrote: »

dont ptsb still have a clawback clause?

They all have the clause, its a matter of whether its enforceable. Evidence suggests not, but personally I'd rather not be a test case!

Cyrus

SarahMollie wrote: »

Yes I know, but I've not seen the Banks acknowledge this anywhere, so it would be good to know if someone here had managed to switch in real life.



They all have the clause, its a matter of whether its enforceable. Evidence suggests not, but personally I'd rather not be a test case!

ebs dont have the clause

The Mulk

SarahMollie wrote: »

Yes I know, but I've not seen the Banks acknowledge this anywhere, so it would be good to know if someone here had managed to switch in real life.



They all have the clause, its a matter of whether its enforceable. Evidence suggests not, but personally I'd rather not be a test case!

PTSB have removed their's recently, it was clause 5 in their original T&C.

5. The Bank reserves the right to seek refund of payment of the cashback if mortgage is redeemed in full within 5 years. The loan applicant must return such sum immediately to permanent tsb.

It will be wait and see for a few people on here

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

SarahMollie

The Mulk wrote: »

PTSB have removed their's recently, it was clause 5 in their original T&C.

5. The Bank reserves the right to seek refund of payment of the cashback if mortgage is redeemed in full within 5 years. The loan applicant must return such sum immediately to permanent tsb.

It will be wait and see for a few people on here

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

Yeah I suppose the test will be when people who availed of the offer when the clauses were still included can just ignore the clauses now and move without fear of penalty.

I'm on a fixed rate with BOI and while its not the worst, I think I could do better, and especially in 18months when hopefully more of the promised competitors enter the market.

I want to be able to reduce the interest I pay so that I can maintain payments at their current level but pay the mortgage off sooner, and save myself money in the long term.

I'd say I'm a pretty good mortgage customer (low risk), I'm not overborrowed by any stretch, I work in an industry where there are lots of jobs, I have other savings and I'm close to owning 50% of the property outright (taking into account that prices have risen, I probably already do in real terms). I feel I should be a good candidate to shop around, and after 3 years of paying a fixed rate, BOI will have made more than enough money out of me.

The Mulk

SarahMollie wrote: »

Yeah I suppose the test will be when people who availed of the offer when the clauses were still included can just ignore the clauses now and move without fear of penalty.

I'm on a fixed rate with BOI and while its not the worst, I think I could do better, and especially in 18months when hopefully more of the promised competitors enter the market.

I want to be able to reduce the interest I pay so that I can maintain payments at their current level but pay the mortgage off sooner, and save myself money in the long term.

I'd say I'm a pretty good mortgage customer (low risk), I'm not overborrowed by any stretch, I work in an industry where there are lots of jobs, I have other savings and I'm close to owning 50% of the property outright (taking into account that prices have risen, I probably already do in real terms). I feel I should be a good candidate to shop around, and after 3 years of paying a fixed rate, BOI will have made more than enough money out of me.

it's a good idea to overpay when you can, we did that on our first house, but still took 2 x 6 month mortgage holidays when kids arrived to allow for extended career breaks. We still had a nice bit of equity built up even though the price wasn't that far off what we paid when we sold it.
I'll certainly pay close attention to any new entrants into the market.

tom1ie

In the process of switching my mortgage from aib (ltv<90%) to Ebs variable (ltv<50%) gonna get the 2% payement from Ebs. However the mortgage advisor has told me there is a clawback. When I asked for the literature and terms and conditions to support this he said he'd e mail them on. This was last week so when I get them I'll put up any terms and conditions that could effect people that are in the same boat. As far as I was aware the banks weren't allowed have a clawback.

Cyrus

tom1ie wrote: »

In the process of switching my mortgage from aib (ltv<90%) to Ebs variable (ltv<50%) gonna get the 2% payement from Ebs. However the mortgage advisor has told me there is a clawback. When I asked for the literature and terms and conditions to support this he said he'd e mail them on. This was last week so when I get them I'll put up any terms and conditions that could effect people that are in the same boat. As far as I was aware the banks weren't allowed have a clawback.

there's no clawback

http://www.newstalk.com/EBS-offers-mortgage-cash-back

nothing here either

https://www.ebs.ie/mortgages/back-in-cash

tom1ie

Cyrus wrote: »

there's no clawback

http://www.newstalk.com/EBS-offers-mortgage-cash-back

nothing here either

https://www.ebs.ie/mortgages/back-in-cash

Yeah but I'd still like to have it in writing from them. It's strange that the mortgage advisor is saying one thing and their pr department is saying the opposite. He said something along the lines of, sure if that was the case everyone would grab their switching money and just switch again.
Which is what I had/have planned.

Cyrus

tom1ie wrote: »

Yeah but I'd still like to have it in writing from them. It's strange that the mortgage advisor is saying one thing and their pr department is saying the opposite. He said something along the lines of, sure if that was the case everyone would grab their switching money and just switch again.
Which is what I had/have planned.

id ask for it in writing if there was any ambiguity but you wont see it in writing anywhere that there is a clawback

im switching away from them as we speak :pac::P

Earleybird

tom1ie wrote: »

Yeah but I'd still like to have it in writing from them. It's strange that the mortgage advisor is saying one thing and their pr department is saying the opposite. He said something along the lines of, sure if that was the case everyone would grab their switching money and just switch again.
Which is what I had/have planned.

In the process of doing the same Tom, very little information as to whether others are taking advantage of the switchers so I'm intrigued to see how the process goes

tom1ie

Earleybird wrote: »

In the process of doing the same Tom, very little information as to whether others are taking advantage of the switchers so I'm intrigued to see how the process goes

OK so I got an e mail today off the mortgage advisor in Ebs saying that there is no clawback. To confirm this I also asked the competition and consumer protection commission (ccpc), who gave me a number to ring belonging to Ebs' parent company Aib. When I posed the question to the person on the phone she confirmed there was no clawback at all.
I was 90% sure there was no clawback as per the advice on here and other forums but I just had to make sure, and I now have the added bonus of an e mail from the bank confirming this. Happy days! Thanks for all your help.

mac.in

Has anyone switched out from PTSB before the completion of the contentious 5 year period, without the clawback enforced upon? I'm planning to switch in Dec 17.

al_E_kat

mac.in wrote: »

Has anyone switched out from PTSB before the completion of the contentious 5 year period, without the clawback enforced upon? I'm planning to switch in Dec 17.

Just coming to the end of a switch from PTSB to KBC. Got the 2% cashback in June 2016 and in April 2017 they sent me a letter to say that the clawback no longer applied. No mention of it during the switching process.

mac.in

al_E_kat wrote: »

Just coming to the end of a switch from PTSB to KBC. Got the 2% cashback in June 2016 and in April 2017 they sent me a letter to say that the clawback no longer applied. No mention of it during the switching process.

Thanks.
Mortgage drawn in PTSB Dec 2016. Finishing my one year fixed rate in PTSB in Dec 17. Planning to switch to other bank for better interest rate. Hopefully, I shall not payback the cashback. I shall update once switch complete.

Earleybird

It's been mentioned a few times already here but just for clarity there is no legal right for any of the banks to clawback the cashback offers, so once you receive the cash... switch away. I've switched from PTSB after less than 6 months, will continue switching for as long as the banks have appetite for me and the offers are on the table.

radharc

Earleybird wrote: »

It's been mentioned a few times already here but just for clarity there is no legal right for any of the banks to clawback the cashback offers, so once you receive the cash... switch away. I've switched from PTSB after less than 6 months, will continue switching for as long as the banks have appetite for me and the offers are on the table.

The banks have thieved people rotten down the years but I still wouldn't do this. In my case I signed a commitment that I wouldn't switch for 3 years and will stick to my end of the bargain even if it's not strictly enforceable. Your word has to mean something.

traveller0101

radharc wrote: »

The banks have thieved people rotten down the years but I still wouldn't do this. In my case I signed a commitment that I wouldn't switch for 3 years and will stick to my end of the bargain even if it's not strictly enforceable. Your word has to mean something.

Are you saying this from a legal or honour/respect point of view?

Earleybird

traveller0101 wrote: »

Are you saying this from a legal or honour/respect point of view?

It's obviously an an honour point of view, there is no such legal agreement that would tie you to a mortgage contract for 3 years. Strange approach but each to their own.

The Mulk

Earleybird wrote: »

It's obviously an an honour point of view, there is no such legal agreement that would tie you to a mortgage contract for 3 years. Strange approach but each to their own.

Unless you have a 3 year fixed, you will be liable for an exit clause if you exit within the 3 years, Variable you can exit anytime.

Earleybird

The Mulk wrote: »

Unless you have a 3 year fixed, you will be liable for an exit clause if you exit within the 3 years, Variable you can exit anytime.

Would depend on how rates had gone since entering the fixed period, in some cases there would be a nil exit cost. Generally a cashback offer would more than compensate where there was a break fee to be paid.