Serial Mortgage Switching - Cashback

SuperO'B

So I'm looking at a mortgage for a new house and doing the maths on all the various options. I should say that we are well within borrowing rates so we should not have any issue getting approval unless something weird happens.

I always like to try and beat the system somewhat so I was looking at staying on a variable interest rate and literally just bouncing around the banks collecting cashback until settling on a fixed rate for the lowest interest rate at the end.

Can anyone see any holes in my plan? It's worth about €7K each time @2% (minus solicitor fees) so worth it really for some admin work. I read that you had to be with your previous provider for 12 months before they would entertain a switch but that's the only reference I can find online to any difficulty with it.

Jim2007

Sit down and read the actual terms and conditions of the mortgage you sign and do not rely on comment from the internet, since the only terms that will apply is the ones you sign up to.

SuperO'B

Ya this is obviously sound advice but I cannot seem to find anything anywhere to say there is claw back or other. I guess what I am looking for here is for anyone that has done something similar or perhaps anybody with knowledge that will say,"well while it might not say it in the terms, Bank XXX will not consider a switcher unless it's been more than 12 months" or something like that.

browne_rob5

https://www.askaboutmoney.com/threads/how-to-get-cash-back-4-times-in-6-months.214963/

Good post on how it's done above.

SuperO'B

Great post. That's exactly what I was after. I think I am going to start with BOI this time around and maybe avoid EBS. Can't be too greedy :-)

Tefral

A friend of mine did this. There's an askaboutmoney thread on it.

He was up 11k after all was said and done.

I spoke to my solicitor on it recently. She was charging 1200 for the first one and 650 per bank after that.

Is this your first mortgage, or have you had one before?

Most providers that offer cashback also have higher interest rates. They draw people in with the cashback offer, very often with the customer planning to switch soon thereafter, but when push comes to shove most people don't switch. That's how it pays off for the bank in the long run.

You say you think it's worth it for some admin work, but personally it wouldn't be worth it for me. I've put enough time and mental energy into getting the house, improving it, annual insurance shopping etc. without also committing to going solicitor shopping, AML gathering, revaluation and provider shopping each year.

Then there's the (usually) higher interest rate to consider. I just looked up PTSB's variable with cashback which has APR of 3.95, my own with AIB with no cashback is APR of 3.2. Difference of 0.75.

I'm not going to try to calculate actual figures or take repayments into account, but a quick and dirty calculation: €350k * 0.75% = €2,625. So for the cashback you get, you're losing a few grand off it in the interest you pay, as well as the solicitors fees, your own time cost, etc. And if life happens, you get busy, and you stay with a cashback provider for more than a year, you're not getting any more cashback but you will keep paying the higher interest rate, eventually losing the gains made via cashback.

Having a plan like yours, failing to follow through on it and paying more in the long run is extremely common, and is exactly why banks are literally willing to offer you cash to sign up.

SuperO'B

This isn't my first mortgage no, it's actually my 3rd but for a new property. I totally understand the point of view that people get stuck on one provider with higher interest rates but I think that's why a key piece of the strategy is that you get all the approvals at the same time which are valid for 6 months. The all need the same paperowork so you are not going from scratch each time.

I would be starting with the high variable rate banks and working down the interest rates. I fully understand what you are saying but at worst you would be stuck for 12 months on one lender if it all went wrong. Also, you can only really do this once so it wouldn't be an annual thing. Additionally, I think the ROI for something like this is significantly higher than insurance or utlities provider shopping so it could be a good area to expend energy on. I did the maths last night and I think I'd be +€19,400 to start with bank A, then just prior to drawdown, apply for 3 other banks and get approval. Then drawdown A and start the chain before finishing on a fixed rate.

Cyrus

https://www.boards.ie/discussion/comment/117948968#Comment_117948968

it's well worth doing once you know what you are at and where you want to end up, i did 3 switches 4 or 5 years ago and we had a large mortgage at the time so it was well worth the slight hassle, when we were done collecting cash back i fixed with UB for 5 years.