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



## dublinhead

Mortgage holders to get 10pc bonus for paying lump sum off trackers
                                                       By Charlie Weston Personal Finance Editor Indo
              Monday April 18 2011


Sounds like a good deal?


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## Brendan Burgess

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.


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## Brendan Burgess

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*The big question is whether the offer will be improved or withdrawn 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


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## horusd

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.


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## Howitzer

Brendan Burgess said:


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 *The big question is whether the offer will be improved or withdrawn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


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## Fatphrog

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


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## Brendan Burgess

Howitzer said:


> 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.


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## OMD

Brendan Burgess said:


> 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


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## Complainer

Howitzer said:


> 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.


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## Howitzer

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.


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## munsterman25

Fatphrog said:


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


 
As of friday my mortgage provider (one of the big banks) was dismissing the notion outright.


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## daymoh

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?


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## Brendan Burgess

OMD said:


> 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.


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## serotoninsid

daymoh said:


> 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?


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## Greekwife

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.


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## DB74

Greekwife said:


> 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.


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## Panacea

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.


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## Greekwife

DB74 said:


> 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 ?


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## johnobee

Anyone know if Bank of scotland are offering similar reductions?


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## Brendan Burgess

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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## ajapale

I dont know what branch of "game theory" this comes under but I figure that the banks first offer has to be their best offer. 

This is similar to a redundancy situation where if there is an expectation of a better offer some time in the future than there will be little or no takers.

If I were a bank I would pitch it initially slightly higher then when a certain set amount had been achieved then shave off a few points until another threshold figure had been achieved. I would also publicise the fact that it was a limited time offer and that once the quota had been achieved that the next round would be on less favourable grounds.


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## f9710145

So, does this mean that if you were to pay off your mortgage you'd get a 10% discount? 

Noone seems to have mentioned clearing it altogether yet.  

We're just about to start the selling process and have a PTSB tracker, hoping to get a new mortgage with them on their 5 yr fixed for <50% LTV (using the fact that we'll be off a tracker as leverage if necessary to convince them to give it to us).  If they gave a 10% discount on paying it off we'd be €15k better off - nice!

Also, someone mentioned regular over-payers.  

We've a credit of €18k built up, using PTSB's way of allowing it as a separate balance, wonder if we asked them to take that off the capital would this constitute a qualifying payment?


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## Brendan Burgess

The offer is limited to 50% of the outstanding balance. 

I don't know what will happen to those who are selling their home. 

I don't think you will get any credit for the €18k overpayment built up.

Brendan


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## Ris

I heard you on Drivetime Brendan. Tuned in especially  Good, clear interview. I tend to agree with you that people will mostly hold off on a wait and see policy. Having listened to you, I think I will wait and see what happens with this round. 

I have just under €98,000 left and 11 years on my mortgage at ECB +0.80% and my repayments monthly are €801.85.

I have €49,000 savings in a Triple 35 PTSB account at 2.5% which earned about €1200 over one year and was thinking of transferring about €30k off the mortgage but, your calculator in another post helped clarify things for me. After what the banks have done to this country I think the money is safer in my personal name than theirs! So Ive decided to hold onto my savings for a bit longer. 

Anyway, thanks for the advice and all the posts on this today.


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## Brendan Burgess

Thanks Ris

With 11 years only to go, 10% seems like very good value for you. The max you can pay off is half you mortgage, which is €50,000 in your case.

I am surprised that the calculator didn't scream - "pay it off."



> After what the banks have done to this country I think the money is safer in my personal name than theirs!



That is one huge advantage of paying off your mortgage - your deposit is always at some risk. I think it's safer if you pay it off.


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## ajapale

Ris, Have you any financial requirements (such as college fees) on the horizon (years 7,8,9,10 & 11)? Also you should consider not locking away *all *your savings in paying down the mortgage. I suggest you should keep some of it readily accessible in the event of the unexpected. aj


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## f9710145

50% would still be great if you can access the cash.  In our case both my parents have recently come into a bit of cash (retirement/inheritance) and we already have a good bit that would be a deposit for a house - so may potentially be able to use deposit for the discount and then borrow it from parents when we need it, repaying from the proceeds of our house sale, assuming safe enough sale , but the other houses round here are selling well and we wouldn't need deposit if no sale anyway.
Be interesting to see what the take up is.


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## serotoninsid

Brendan Burgess said:


> That is one huge advantage of paying off your mortgage - your deposit is always at some risk. I think it's safer if you pay it off.


That's where I was coming from.  This would certainly make my mind up for me - come on NIB!!


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## Mixednuts

Is it just me thinking that PTSB must try harder .

Im on a tracker (ECB +.8) but am due to lose this in the short term (12-18months) as we are planning to move house and just waiting for right property to come on the market , so this deal is not really worth anything to me because any disposable income I have will be held for renovations on new home .

But i was expecting something more significant .

M


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## casatara

good question, I was also wondering about bank of scotland, also does anyone know if they would do a deal on a lump sum settlement of a mortgage?


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## Brendan Burgess

Mixednuts said:


> Is it just me thinking that PTSB must try harder .
> 
> Im on a tracker (ECB +.8) but am due to lose this in the short term (12-18months) as we are planning to move house and just waiting for right property to come on the market , so this deal is not really worth anything to me because any disposable income I have will be held for renovations on new home .



They will lose by offering you this deal. If you have spare cash you should pay it off as quickly as possible in case the deal gets fully subscribed. Your correct strategy is

1) Pay as much as possible to PTSB and get the 10% bonus
2) Sell your house
3) Start looking for another house. 

I would go further and say that once you get a contract signed on your house, you should beg or borrow as much as possible to reduce your mortgage as much as possible. 

Brendan


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## Howitzer

Mixednuts said:


> Is it just me thinking that PTSB must try harder .
> 
> Im on a tracker (ECB +.8) but am due to loose this in the short term (12-18months) as we are planning to move house and just waiting for right property to come on the market , so this deal is not really worth anything to me because any disposable income I have will be held for renovations on new home .
> 
> But i was expecting something more significant .
> 
> M


Sorry if this sounds harsh, it's more of a general statement, but I don't get this sense of entitlement. 

I put some calculations up here about a year ago showing what I thought the bank's should pay to get someone off a tracker. These were based on some actuarial assumptions. I came up with a figure just below this level.

Just to get things straight - the bank doesn't owe you anything. You have an outstanding mortgage which you have to pay off. The average term of a mortgage is only 7 years (it may be more now, this was a throw away stat from a few years ago). The banks know this. You seem to know this - or at least the logic under-pining it in that you recognize that you'll have to give it up in the short term. If you keep waiting for a better deal you could be left waiting.

Ajaple, I think you're spot on. This is a good deal - or at least good enough. The banks may be losing more on some trackers but once they've reduced their loan book by a certain amount they'll just swallow these losses and move on with their business.


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## Tweety

Hi,

If people avail of this, will they still keep their tracker rate on remaining mortgage balance?

Will the bank contact each customer to offer this or is it up to the customer to contact the bank if they are interested?

Will it apply to Interest Only loans?

Thanks.


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## Brendan Burgess

Hi Howitzer

I agree with your general view that this is a good deal. 

However, I don't agree with the basis of your calculation in the other post which I reproduce here



> Well here's how I make my calculation.
> 
> The average life of a mortage is 7 years. After that you switch / move /  release equity to build an extension, all of which would be used to end  the tracker.
> 
> Most of these loss making trackers were given out in 05-07. Suggesting an average of 3.5 years remaining.
> 
> If you move to a variable you'll, on average, pay 2% extra in interest.
> 
> 2 x 3.5 = 7% of your outstanding principle (15K from 200K).
> 
> Banks will make a similar calculation to this when deciding what to  offer you to break your tracker. It'll be the exact same formula they  used when calculating breakage fees for those who wanted to go from a  Fixed to Variable.


I can't agree with your assumption that the average tracker mortgage taken out in 05 - 07 has 3.5 years to go. 

The average of 7 years was during the peak of the switcher mortgage era - switchers are no longer available. 
People who bought during 05-07 are in negative equity, so they will not be able to move, even if they wanted to. 
People who are on cheap trackers, who are not in negative equity, will factor this into their decision and will delay their move. 

Against that, someone who has cash available to them now who is considering availing of this deal, may well be able to move within the next 10 years.

I based my calculations on an example of 20 years to go on a mortgage. While the average time to go will not be 20 years, it will be closer to 20 than 3.5

But if someone thinks that they will be paying off their mortgage in the next few years, 10% is a great deal.


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## Ris

Brendan Burgess said:


> Thanks Ris
> 
> With 11 years only to go, 10% seems like very good value for you. The max you can pay off is half you mortgage, which is €50,000 in your case.
> 
> I am surprised that the calculator didn't scream - "pay it off."
> 
> 
> 
> That is one huge advantage of paying off your mortgage - your deposit is always at some risk. I think it's safer if you pay it off.



Thanks for the reply. I hadnt really thought about the deposit risk - mostly because the money is in the same bank as the mortgage so in the back of my mind I guess I figured one would offset the other if the worst came to pass.

Anyway you have made me think again. I will give PTSB a call today and arrange to see them and take it from there. Cheers


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## DerKaiser

Ris said:


> Thanks for the reply. I hadnt really thought about the deposit risk - mostly because the money is in the same bank as the mortgage so in the back of my mind I guess I figured one would offset the other if the worst came to pass.


 
I wouldn't assume that


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## Ris

DerKaiser said:


> I wouldn't assume that



Yeah I realise that now. I had been assuming that but of course nothing is that simple in finance!


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## Butter

Just did a few calculations on the value of this deal to someone with an investment mortgage and a tracker of 0.8% above ECB using Brendan's link 
http://www.loanclc.com/

€100,000 outstanding with 11.5 years to run.
Total repayments = €110,781

Pay €5,000 off mortgage and get €500 credit from PTSB.
Total Repayments = €104,688

Saving €6093 in total repayments - but this has cost you €5,000 to benefit by €1093 over 11.5 years.

Factor in the reduction in interest & the subsequent rise in tax of €497 over the 11.5 years (assuming no changes in the tax regime for landlords).

Factor in having my €5,000 available to me with a small interest accruing (let's say 2% p.a less DIRT) each year which would give me €866 in interest over 11.5 years from this link 
http://www.moneychimp.com/calculator/compound_interest_calculator.htm

€497 + €866 = €1363 v €1093 (saving from PTSB deal)

So in this case a landlord would be worse off by taking this offer.
These calculations assume that interest rates stay at the current rate over the 11.5 years.  Of course this won't actually be the case.  

With ECB rates at 2.00% the deal would save €1440 but would cost €700 in lost tax relief & €866 in interest = €1566.

With ECB rates at 3.00% the deal would save €1798 but would cost €914 in lost tax relief & €866 in interest = €1780.

So I think the ECB interest rates would have to be over 3.00% for the full 11.5 years before there would begin to be any advantage at all to taking the deal for an investment mortgage holder.  At what point it becomes an advantage to tie up €5,000 is debatable.  The ECB rate would have to be 6.00% over the full 11.5 years to gain €373 by paying off €5,000 and that's assuming that the saving interest rate stays at 2% less DIRT.

So whatever about this possibly being a good deal for home owners - I just don't see the advantage for an investment mortgage holder (the caveat being the figures that I have used).


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## L&A

Do they apply the €500 now or at the end of the mortgage?  If you have 20+ yrs to go, then €500 won't be worth much by then.


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## Howitzer

Brendan Burgess said:


> Hi Howitzer
> 
> I agree with your general view that this is a good deal.
> 
> However, I don't agree with the basis of your calculation in the other post which I reproduce here
> 
> I can't agree with your assumption that the average tracker mortgage taken out in 05 - 07 has 3.5 years to go.
> 
> The average of 7 years was during the peak of the switcher mortgage era - switchers are no longer available.
> People who bought during 05-07 are in negative equity, so they will not be able to move, even if they wanted to.
> People who are on cheap trackers, who are not in negative equity, will factor this into their decision and will delay their move.
> 
> Against that, someone who has cash available to them now who is considering availing of this deal, may well be able to move within the next 10 years.
> 
> I based my calculations on an example of 20 years to go on a mortgage. While the average time to go will not be 20 years, it will be closer to 20 than 3.5
> 
> But if someone thinks that they will be paying off their mortgage in the next few years, 10% is a great deal.


My original calculations were based on information available at the time. Since then mortgage terms have, probably, increased. The difference between variable and tracker rates certainly has. So to my eyes 10% looks about right. Today.

My original calculations were based on giving up the tracker all together. This deal allows you to retain it for the outstanding amount. This is a key point.

Michael Dowling of the Independent Mortgage Advisers Federation has re-iterated his 25% assertion. No calculations have been supplied to back that up but I'd assume they'd be similar to yours and others I've seen elsewhere. To be honest I find those figures hard to follow and accept. They're correct but I don't think they're right. 

They assume the mortgage is retained for the duration of the term and ignore increasing ECB rates and what this may cost the mortgage holder. They look best case scenarios and I think the true cost is (or, will be) lower.

If this deal was available to me and I had money burning a hole in my pocket I'd be happy to take it. More so if I aspired to move property in the short to medium term.


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## Butter

Wonder why he says it is a good deal for buy-to-let investors in that piece.  I don't see how?

http://www.independent.ie/business/...over-banks-tracker-mortgage-deal-2622877.html

L&A - I believe the £500 is applied at the same time as the lump sum is paid off.


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## duchalla

what do posters think of the chances of other banks offering something like this?


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## Brendan Burgess

Butter said:


> Wonder why he says it is a good deal for buy-to-let investors in that piece.  I don't see how?
> .





> The deal made sense for buy-to-let investors, if they had the spare  cash, Mr Conway said.


I don't agree and I have emailed Frank Conway to find out how he arrived at this conclusion.  It makes less sense for buy-to-let investors than for home owners for the following reasons: 


The borrower gets tax relief on the interest paid on the buy-to-let mortgage
The loan is more likely to be long-term. Homeowners often have to sell because they want to move homes. Investors can keep their property.
Buy to lets are more likely to be interest only than repayment.
Against these, the buy to let mortgage might have a higher rate of interest, but if they are trackers, probably not.

I haven't gone through your figures Butter, but I presume that they show that it's less attractive to buy-to-let investors. 

Brendan


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## Butter

Brendan Burgess said:


> I don't agree and I have emailed Frank Conway to find out how he arrived at this conclusion. It makes less sense for buy-to-let investors than for home owners for the following reasons:
> 
> 
> The borrower gets tax relief on the interest paid on the buy-to-let mortgage
> The loan is more likely to be long-term. Homeowners often have to sell because they want to move homes. Investors can keep their property.
> Buy to lets are more likely to be interest only than repayment.
> Against these, the buy to let mortgage might have a higher rate of interest, but if they are trackers, probably not.
> 
> I haven't gone through your figures Butter, but I presume that they show that it's less attractive to buy-to-let investors.
> 
> Brendan


 
I based the numbers on an example "close to home" Brendan and for me it certainly doesn't look worthwhile.  It would take a pretty steep rise in the ECB rate before it would start to "break-even" for me when I weigh the reduction in overall repayment against tax relief and interest earned over the remaining term.
I think it would be important for everyone who may be contemplating this offer to work out the relevant figures for themselves.  Prehaps a bigger mortgage, at a higher interest rate with a bigger lump sum repayment would look different.
Even it is was my own home mortgage I'm not sure I would go for this deal.  Cash is king to me at the moment and I don't think I'd lock it away for good if my tracker was at a low rate, which many of PTSBs trackers are.


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## Butter

Butter said:


> Just did a few calculations on the value of this deal to someone with an investment mortgage and a tracker of 0.8% above ECB using Brendan's link
> http://www.loanclc.com/
> 
> €100,000 outstanding with 11.5 years to run.
> Total repayments = €110,781
> 
> Pay €5,000 off mortgage and get €500 credit from PTSB.
> Total Repayments = €104,688
> 
> Saving €6093 in total repayments - but this has cost you €5,000 to benefit by €1093 over 11.5 years.
> 
> Factor in the reduction in interest & the subsequent rise in tax of €497 over the 11.5 years (assuming no changes in the tax regime for landlords).
> 
> Factor in having my €5,000 available to me with a small interest accruing (let's say 2% p.a less DIRT) each year which would give me €866 in interest over 11.5 years from this link
> http://www.moneychimp.com/calculator/compound_interest_calculator.htm
> 
> €497 + €866 = €1363 v €1093 (saving from PTSB deal)
> 
> So in this case a landlord would be worse off by taking this offer.
> These calculations assume that interest rates stay at the current rate over the 11.5 years. Of course this won't actually be the case.
> 
> With ECB rates at 2.00% the deal would save €1440 but would cost €700 in lost tax relief & €866 in interest = €1566.
> 
> With ECB rates at 3.00% the deal would save €1798 but would cost €914 in lost tax relief & €866 in interest = €1780.
> 
> So I think the ECB interest rates would have to be over 3.00% for the full 11.5 years before there would begin to be any advantage at all to taking the deal for an investment mortgage holder. At what point it becomes an advantage to tie up €5,000 is debatable. The ECB rate would have to be 6.00% over the full 11.5 years to gain €373 by paying off €5,000 and that's assuming that the saving interest rate stays at 2% less DIRT.
> 
> So whatever about this possibly being a good deal for home owners - I just don't see the advantage for an investment mortgage holder (the caveat being the figures that I have used).


 
I just went back for another look at the figures and there is a way in which you could benefit more from this deal - reduce the capital but keep your repayments at the old level.

In the first example it would change the figures like this:

€100,000 outstanding with 11.5 years to run.
Total repayments = €110,781

Pay €5,000 off mortgage and get €500 credit from PTSB. Keep repayments at the old level & knock 9 months off the length of the loan.
Total Repayments = €104,008

Saving €6773 in total repayments - but this has cost you €5,000 to benefit by €1773 over 10 years & 9 months.

Factor in the reduction in interest & the subsequent rise in tax of €415 over the 10.75 years (assuming no changes in the tax regime for landlords).

Factor in having my €5,000 available to me with a small interest accruing (let's say 2% p.a less DIRT) each year which would give me €806 in interest over 10.75 years from this link 
http://www.moneychimp.com/calculator/compound_interest_calculator.htm

€415 + €806 = €1221 v €1773 (saving from PTSB deal)

So, if I haven't completely mixed myself up - it is possible for buy-to-let investors to benefit from this deal - pay down the capital but keep repayments at the old level and it could well be worthwhile, even taking into account the loss of tax relief. But in this example you would need to keep in mind that you have lost access to €5,000 for nearly 11 years to benefit by €552.


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## Panacea

Brendan I think your estimate is somewhat over optimistic at the current offer level particularly if it is due to expire in mid June


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## minion

I think they would have a much better take up if they allowed 10% on monthly over-payments.  A lot of people dont have lump sums, but could handle higher monthly payments easier.


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## valiant

I agree with minion, but this probably would not help them achieve their short term capital objectives. Maybe a combination of both options would be considered going forward.


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## Brendan Burgess

minion said:


> I think they would have a much better take up if they allowed 10% on monthly over-payments.  A lot of people dont have lump sums, but could handle higher monthly payments easier.



You are right, but the administrative hassle would outweigh any benefits to them. 

Save up the overpayment. Borrow a bit short term and pay off €5,000 before the deadline


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## cork_south

I got a letter of offer for this this morning from TSB.
I'm thinking of paying a bit off mine.
I've 12 y.5ears left, 136K on ECB +1.25


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## Howitzer

Brendan Burgess said:


> Borrow a bit short term and pay off €5,000 before the deadline


You have to specify the source of the funds.

Another point from the small print, if you sell within 6 months (clear the mortgage) there is a clawback on the bonus.


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## Ris

I got a letter of offer this morning from PTSB.

I see that the offer reduces the length of your mortgage and not the actual monthly amount. Your mortgage repayments remain the same for a shorter duration. 

I had hoped that the offer would reduce my monthly outgoings so that in the event of job loss or further reduction in hours I would have a better chance of paying the mortgage. Im a bit disappointed. Will have to do a bit more thinking about it than I thought..


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## onlyonpaper

A friend of mine has a Tracker with PTSB (Euro +0.8%). Owes about 50k with 5 years left.He has 5-10k  spare cash on deposit( even factoring in a rainy day).Was wondering if there is any indication yet of the take up rate on this offer as he is in a dilemma to know what to do. Some are saying "Cash is King" and hold on to it; Others are saying a better offer will be made by PTSB if take up is poor and even others, Brendan included if I read it right who would feel it is too good an offer to refuse. He's in as stable a private sector job as there is and can cover repayments comfortably. Any thoughts on site on what he should do.


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## Brendan Burgess

With 5 years to go, this is a great deal for your friend. He should take maximum advantage of it. 

The only issue is whether there will be a better deal afterwards. I just don't know.


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## Brendan Burgess

Howitzer said:


> You have to specify the source of the funds.
> 
> Another point from the small print, if you sell within 6 months (clear the mortgage) there is a clawback on the bonus.



Hi How

How is the clawback calculated? 

Brendan


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## Howitzer

*How does PTSB treat overpayments on mortgages?*

There wasn't much greater detail than I've presented. Clear the mortgage within 6 months and the you lose the entire bonus.


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## ricta

*Can't make up my mind!*

I've read through the two threads, at first I thought this would not be a good deal for me, then I thought it would, now i just don't know! 
I have an investment mortgage of €80,000 at ECB+0.8% (2.05%) with 14.5 years left. I am not making overpayments at the moment, but would plan to redirect regular savings to the mortgage when rates swing the other way (12 months time?), I'm currently getting 3.5% gross on savings, ironically also with ptsb! In 14.5 years I will be 67 so I would plan to reduce the term in the future by a combination of lump sum and overpayments, but that's probably 1 to 3 years away, depending how rates go. 

Butter, your figures would seem to say that I should take some (€20,000) advantage of the offer now, getting a bonus to do what I would plan to do in 2 years time anyway?

Brendan, your thoughts would seem to suggest it's not a good deal for me, or have I read you wrong?


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## ricta

Ris said:


> By the way, does anyone know if lump sums paid off mortgages in the normal, way are treated the same, i.e. they come off at the end of the term?


 
I paid a lump sum into my PTSB tracker a few years ago, requesting it be taken off the loan amount, they immidiately reduced the outstanding amount, left the repayment level the same and reduced the term. So I benefited straight away. I would expect them to do the same with this overpayment and bonus, but will ring to check.

Many many years ago, when I had my first mortgage with them on my PPR, I used to leave my repayments unchanged when rates dropped, but noticed they didn't credit the overpayments until the end of the financial year. Not sure if they have changed that practice.


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## Brendan Burgess

ricta said:


> I have an investment mortgage of €80,000 at ECB+0.8% (2.05%) with 14.5 years left. I am not making overpayments at the moment, but would plan to redirect regular savings to the mortgage when rates swing the other way (12 months time?), I'm currently getting 3.5% gross on savings, ironically also with ptsb! In 14.5 years I will be 67 so I would plan to reduce the term in the future by a combination of lump sum and overpayments, but that's probably 1 to 3 years away, depending how rates go.
> 
> 
> Brendan, your thoughts would seem to suggest it's not a good deal for me, or have I read you wrong?



I don't think it's a good deal for you at all but you will have to work out the numbers for yourself using the approach in this thread.

You are paying 2.05% gross, which is around 1% after tax. You can earn around 2.5% net on deposit.


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## Brendan Burgess

Ris said:


> I got a letter of offer this morning from PTSB.
> 
> I see that the offer reduces the length of your mortgage and not the actual monthly amount. Your mortgage repayments remain the same for a shorter duration.
> 
> I had hoped that the offer would reduce my monthly outgoings so that in the event of job loss or further reduction in hours I would have a better chance of paying the mortgage. Im a bit disappointed. Will have to do a bit more thinking about it than I thought..



This seems fair enough to be honest.


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## horusd

Did anyone come up with a calculator to show how this offer from PTSB would work out in individual circumstances? I got the offer letter from them, they just give an example. But I want to work out how this would apply to me, if it's worth doing in my case. 

As a bye the bye I notice they word the letter such that it appears they are doing the customer a favour, and as a result of customer demand.  No mention of the other real reason of saving themselves a fortune on interest. So much for straight-talking and being upfront from the PTSB. I know we expect this kind of thing from banks .But I hoped against hope that they would just say it as it is, and stop engaging in this kind of spin.


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## Brendan Burgess

I suggest an approach in this Key Post

http://www.askaboutmoney.com/showthread.php?t=153229

Brendan


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## julius128

I believe if lower number of people apply for this, they will come up with better offer in near future, or extend it to regular overpayment rather than lump sum and extend it for much longer period.


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## Ris

Maximum amount of 50% no longer applies

http://www.independent.ie/national-...ho-pay-off-their-entire-homeloan-2660222.html


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## Brendan Burgess

I wonder if this means that the clawback if you sell your house within 6 months still applies? It wouldn't make a lot of sense. 

Brendan


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## Greta

Brendan Burgess said:


> I wonder if this means that the clawback if you sell your house within 6 months still applies? It wouldn't make a lot of sense.
> 
> Brendan



This paragraph in the article suggests that the clawback no longer applies:



> Up to now, mortgage holders could only pay off half the mortgage. But now someone who is selling their house will be able to benefit from the 10pc bonus deal.


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## Ris

I found this very interesting article from Nama Winelake which really explains this offer very well. Essentially the longer you have left on your mortgage, the less benefit this is to the mortgage holder. If you have more than four years left on your mortgage then PTSB starts to profit and your "10% saving" starts to reduce annually to a point where you can actually lose out if your mortgage has a long term to run, while PTSB profits. 

http://namawinelake.wordpress.com/2011/04/18/a-cheeky-offer-on-tracker-mortgages-from-permanent-tsb/

In any event, in my case. I have made my decision. I'm not going for this offer. I am going to contact PTSB and arrange to directly pay off a lump sum against my mortgage in the usual way which will reduce my overall monthly repayments as opposed to this offer which reduces the length of your mortgage. 

At least then I will have peace of mind knowing that in the worst case scenario, i.e. unemployment, I can still pay my mortgage (even if I have to eat pasta and beans for years!) In the meantime, while I am still working I will save the difference between my 'new' repayment and my present repayments and every so often transfer that lump sum off the principal, thereby regularly reducing the monthly repayment.

I guess it all comes down to peace of mind as opposed to whether you can benefit from a relatively small amount of discount. Well it does for me anyway!

Im going to see if I can haggle with the Manager and suggest that as I am currently costing them money because of my tracker mortgage it is clearly in their best interests for me to pay it off as quickly as possible. Therefore is there a discount or 'good will' sum they can offer me in return!! I will probably get shown the door with a flea in my ear but Im up for the challenge! lol

Anybody know what I am currently costing the bank on an annual basis? My tracker rate is ECB + 0.8% on a balance of €97,000?


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## f9710145

We wnet into ptsb a few weeks ago looking for a 56% mortgage on their fixed rate which is max 50%.  Our leverage was that they'd be getting their tracker back.  Manager said he really didn't know but would put it to the higher powers, who refused point blank.  I was surprised.  Anyway, caught wind of the improved deal with 10% discount if you redeem in full and thought that would be for us since our house is going on the market next week.  But while they're extending it to full redemption, they haven't extended the end date so you have to request your quote by 17 June and then make your payment within 20 days.  It'll be a few months before we have our cheque (fingers crossed).  I'm really not sure how many extra people will be enticed by this new offer, don't think there are too many out there with a 200k mortgage and 200k in savings (not enough for them to make the jump from €4m to €500m).  But maybe I'm wrong.  I'm just hoping they have a poor take up again and just extend the dates by a few months.


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## minion

julius128 said:


> I believe if lower number of people apply for this, they will come up with better offer in near future, or extend it to regular overpayment rather than lump sum and extend it for much longer period.



I think you are right.  They would entice many more people with this offer on overpayments.  More people will be prepared to overpay monthly than pay off lump sums.  Thats if they even have a lump sum in the first place.

Im surprised the other banks havent followed this offer publicly though.  I know for a fact they are doing similar if approached with a deal.


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## oldnick

well, I wish AIB would do a deal - I've twice asked my mngr if I pay off the remaining 360k on a mortgage tracker would I get anything. Answer -no.
 Crazily, AIB are paying more to me depositing money then they're charging me on tracker. (No great advantage to me though after tax)


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## Brendan Burgess

Ris said:


> I found this very interesting article from Nama Winelake which really explains this offer very well. Essentially the longer you have left on your mortgage, the less benefit this is to the mortgage holder. If you have more than four years left on your mortgage then PTSB starts to profit and your "10% saving" starts to reduce annually to a point where you can actually lose out if your mortgage has a long term to run, while PTSB profits.



Hi Ris

You should be looking at this from your point of view and not from PTSB's point of view. To be fair to Namawinelake, they did note this in an update to the post. 

You should read this post which explains all the factors as they affect you: 



> I have made my decision. I'm not going for this offer. I am going to  contact PTSB and arrange to directly pay off a lump sum against my  mortgage in the usual way which will reduce my overall monthly  repayments as opposed to this offer which reduces the length of your  mortgage.



This is really a very bad idea indeed. Let's say you owe €200k and you want to pay off €100k.  After your option, you will owe €100k. After taking the 10% bonus, you will owe €90k. 

You probably should read my guide to mortgage repayment calculations to see how bad your proposal is.

If you want to do the maths. Pay off €90k and invest the remaining 10k in a deposit account. Let it accumulate and your net mortgage will disappear quickly.

Brendan


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## Sim Two

According to an article by Niall Brady in the Business section of last week's Sunday Times, PTSB has been forced to extend the deadline for the overpayment bonus to the end of August given the poor uptake of the offer.  

"Only 1,500 borrowers had committed to paying lump sums off their mortgages when the deadline expired on Friday.  The average overpayment was €35,000 well above the individual minimum of €5,000. 

The total overpayment is just 10% of the ceiling of €500m set on the incentive scheme" said Brady.  

Brady reports that trackers are costing PTSB about €400m a year.


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## f9710145

Well, we got our discount, sold the house, paid off the mortgage and are now €14,500 better off.  It may not be a brilliant deal for most but for anyone selling a house anyway it's great!


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## Complainer

f9710145 said:


> Well, we got our discount, sold the house, paid off the mortgage and are now €14,500 better off.  It may not be a brilliant deal for most but for anyone selling a house anyway it's great!


Was there not a condition about you NOT selling the house?


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## f9710145

The original offer allowed you to pay off up to 50% and had a clawback clause if you redeemed in full within 6 months.  The updated offer allowed a full redemption and obviously no full redemption clawback.  Once the mortgage account is closed and your house is your own, they have no say in what you do with it.


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