Hi Sarenco
I think that the terms of the cash back are very clear to a professional solicitor or accountant or someone who reads askaboutmoney and who understands percentages.
But the vast majority of people don't fall into this category. They simply see that they will get 2% cash back from BoI which is more than they will get from AIB. So they go for it.
Is it suitable for a borrower who is at the edge of the deposit requirement?
I am a first time buyer who wants to buy a house for €100,000. I have €10,000, so they will lend me €90,000.
They give me €1,800 back immediately which I can use to pay the solicitor or for furniture.
In effect, they are lending me €1,800 and charging me a much higher mortgage rate for that privilege.
I see where you are coming from, but I would still be very slow to recommend BoI to such a buyer. If they are on the cusp of affordability, they probably should not be buying yet. There is an increased risk of going into arrears and if they do, they are prisoners of BoI's higher rates for at least the next 5 years.
I think that there might be a practical issue here as well. BoI's underwriting criteria are often much stricter than other lenders. So I think that these marginal cases might not get a BoI loan.
Brendan