FTB, x4.5 income exemption, multiple cash backs. Can this be pulled off?

[patconn]

Hi,

First time buyer here. Hopefully due to draw down this summer.

Have been reading old posts the last few days on performing multiple quick switches upon first draw down of mortgage and it has me hopeful we could do the same, but I’m looking for some advice as things may have changed since. This Key Post from 2019 by Sean Og is my inspiration - Thread 'How to get cash back 4 times in 6 months' - but for those that want a quick synopsis, the tactic is as follows;

1. Get mortgage approval from 4no. banks at the same time that offer cash back, ensuring none are due to run out until your switches are complete so you don’t need to reassess.
2. Secure backing from your solicitor and inform them you’ll be performing multiple quick switches and look for a reduced fee
3. Take out multiple mortgage protection policies with banks in question and get ready to cancel each
4. Draw down from Bank A, switch to Bank B within a week (cash back will follow after c. 2 months)
5. Draw down from Bank B, switch to Bank C within a week (cash back will follow after c. 2 months)
6. Draw down from Bank C, switch to Bank D within a week (cash back will follow after c. 2 months
7. Stay with Bank D, ideally the one with the best rate and/or is lenient on time spent with previous lender.

Currently mortgage approved with EBS and have obtained a income exemption to bring the total to x4.5 combined salary. Approved in Principle with BOI but waiting on them for confirmation of x4.5 salary. Getting started on AIB and Haven application as have seen they also provide x4.5 if you are in early in the year, time running out on those fronts I know. PTSB cash back offer is ending this month, but I may apply on the chance that this is extended, although they seem reluctant to give x4.5.

As far as I know, the main things that have changed since the old posts are as follows;

1. EBS, BOI, Haven don’t offer cash back if you go with a variable rate anymore, which was the method of choice by the lads in the old posts, so there’s an added layer of complexity and possible cost in breaking from a fixed term so quickly. AIB and PTSB still seem to offer variable rate cash backs.
2. Banks on the whole seem more reluctant to allow you to switch within your first year, although from posts on here it looks like this isn’t an exact science. From the old posts, I think BOI and PTSB were the two that were stubborn on this front.

Additionally, there’s a few things specific to our situation holding us back, directly and indirectly;

1. Not guaranteed to get x4.5 approval from multiple banks due to time running out as banks use up their allowances in offering these exemptions (20% of all FTB mortgages) as well as combined salary being slightly below €75k (which bonkers . ie states is a threshold some banks have in offering the exemption).
2. Due to us requiring the x4.5 exemption, upon switching, banks may have to reassess the terms, which means this could delay the process and knock out the possibility of further switches and/or at worst decline to offer the x4.5 again for some reason e.g. they’ve ran out of these to give for the given year.

I’d really appreciate any insight or suggestions on the above. I could well be missing multiple things and am completely open to hearing anyone’s opinion. Some questions I’d have from the off for those more knowledgeable on the current market are;

1. Would going to a broker to facilitate this only add to the complexity and cost?
2. Breakage fees - is it still the case that if a switch from a fixed rate happens so quickly as there is no fluctuation in current lending rates, that breakage fees should be €0 or low?
3. Is there any negative associated with having your eggs in this many baskets? As far as I can tell, worst comes to worst I go with Bank A, chance my arm with the quick switches, stick with Bank A if no banks accept the switch. I am then beholden to Bank A’s rate, which may be worse than Bank B/C/D, and I pay more interest. This is true also for if I make a switch or two but get stuck on Bank B or C, but I’d have got some extra cash back at that stage.
4. I’m right in saying that I lose my First Time Buyer status as soon as I draw down the first mortgage, so I’m just classed as a switcher from then on?
5. If I’m classified as a switcher, does that mean if i try to switch to Bank B they cannot offer me x4.5 due to me not being a first time buyer any longer?

Thanks in advance!

 

[misemoi]

Initial thought is that you would struggle to switch with that lti, if you even get it to start with. How much cashback are you anticipating with your loan value, net of charges and net of being stuck on an unfavourable rate at some stage ?

 

[Monbretia]

Why is there a need for multiple insurance policies, can't the same one just be switched as well as in the assignment changed to whatever bank is needed?

 

[Fortune]

can't the same one just be switched as well

I'm guessing speed is the issue.

 

[ArthurMcB]

net of being stuck on an unfavourable rate at some stage ?

This would be negligible as you'd be switching immediatley in theory.

 

[MugsGame]

Only the first bank needs to give you an exemption from CBI LTI rules. However, each bank will also have their own internal risk-based rules.

 

[patconn]

Initial thought is that you would struggle to switch with that lti, if you even get it to start with. How much cashback are you anticipating with your loan value, net of charges and net of being stuck on an unfavourable rate at some stage ?

So far only EBS have confirmed x4.5 of salary, do at least I have this to fall back on. Fair point on the difficulties switching with the high LTI and that’s a question I was asking myself. Another commentator has said the exemption only needs to come from the first bank and thereafter it would be up to the new bank’s risk assessments. Possible that having mortgage approval at the exemption amount of x4.5 with said bank would aid to the switch? I’ll follow up with banks on the phone this week.

 

[Persia]

How much cash back will these maneuvers generate?

 

[skrooge]

1. Maybe - really depends on how good (or bad) you are at putting your own case forward.

2. Don't confuse mortgage lending rates and the cost of bank funding. It's the latter that will determine any break fee. These rates change daily. If market rates decline a break fee is more likely. Any news that results in a sudden decrease in market rates may lead to a (higher) break fee for you.

3. Depends on how you structure the switches. I presume you'll want to end up on the best rate (as of now) which might imply your first drawdown is the 'worst' on offer. The risk is you get stuck on the least best option for some reason.

4. Yes and no. Technically you won't be an FTB but if the aim is to switch quickly you're basically aiming to fool the lenders into thinking they're the first bank and not one in a queue. In other words each of them will need to view you as an FTB for it to work quickly.

5. As pointed out by others the lti rules don't apply to switches but see point 4. If you want to do it quickly you can't rely on this. You have to treat each loan as if it were a standalone FTB mortgage application.

As others have asked an important consideration is how much is your loan. The cost of valuations and solicitors can wipe out a large chuck of the benefit. But these tend to be fixed costs that don't vary with loan size. Whereas the benefits are directly linked to the size of the loan. So there is a minimum threshold for loan amount that will determine how profitable, or otherwise, this process might be.

 

[patconn]

Why is there a need for multiple insurance policies, can't the same one just be switched as well as in the assignment changed to whatever bank is needed?

See quote from Sean Og’s thread;

“You must notify your mortgage protection company that you have switched
They note the lender as an interested party

Some mortgage protection is part of a block scheme and can't be transferred. Just take out a new policy. They are cheap unless you have health issues.”

I suppose it’s to avoid the above and speed up the process as time isn’t on your side.

How much cashback are you anticipating with your loan value, net of charges and net of being stuck on an unfavourable rate at some stage

Sorry, missed this. Loan set to be c. 345000euro.. in a perfect world 2% cash back from EBS + BOI + PTSB + Haven = 27600euro... solicitor c. 4000euro if we can agree a bundle deal as the old posts suggested... break fees 5000euro (? really not sure on this).. unfavourable rate cost could be 0euro if its pulled off correctly, but could be a cost if I get stuck on one of the intermediates or if the order of switching is influenced by the banks willingness to allow switching when I am with the previous lender for such a short period (trying to firm this up) and I need to sacrifice a better rate for to facilitate the switches (provided the maths checks out

Only the first bank needs to give you an exemption from CBI LTI rules. However, each bank will also have their own internal risk-based rules.

Great to know, thanks. I'll ring up each and see if I can get some specifics.

How much cash back will these maneuvers generate?

Difficult to say net (see above reply to Monbretia) but gross could be up to 27600eu.. a multitude of things would have to go right in order for this to happen. Seems harder in 2025, and more difficult with my circumstance (FTB that requires income exemption)

2. Don't confuse mortgage lending rates and the cost of bank funding. It's the latter that will determine any break fee. These rates change daily. If market rates decline a break fee is more likely. Any news that results in a sudden decrease in market rates may lead to a (higher) break fee for you.

Noted. Thanks for that.

3. Depends on how you structure the switches. I presume you'll want to end up on the best rate (as of now) which might imply your first drawdown is the 'worst' on offer. The risk is you get stuck on the least best option for some reason.

Noted. Tricky one.

4. Yes and no. Technically you won't be an FTB but if the aim is to switch quickly you're basically aiming to fool the lenders into thinking they're the first bank and not one in a queue. In other words each of them will need to view you as an FTB for it to work quickly.

Thanks for this. Is this something you heard of being pulled before? When switching, is there not a process of cross over between banks, i.e Bank B would see clearly you've started with Bank A, and therefore couldn't be fooled?

5. As pointed out by others the lti rules don't apply to switches but see point 4. If you want to do it quickly you can't rely on this. You have to treat each loan as if it were a standalone FTB mortgage application.

Thanks. Is the main reason for this that, if Bank B thought you were just simply switching, they are likely to flag it due to the near zero time spent with the Bank A, going against their time with previous lender policy?

As others have asked an important consideration is how much is your loan. The cost of valuations and solicitors can wipe out a large chuck of the benefit. But these tend to be fixed costs that don't vary with loan size. Whereas the benefits are directly linked to the size of the loan. So there is a minimum threshold for loan amount that will determine how profitable, or otherwise, this process might be.

Fair point! Loan will be c. 345000euro.. older posts outline that solicitor should be approached before hand and a compromise reached on cost of switches, I'll be calling mine this week.

 

[Zion2022]

I had similar plans when we drew down 3 years ago. Main problem I ran into was all banks (except AIB) required me to have 6 months with current lender before allowing me to switch.

I managed to get 2 cashbacks before writing was on the wall for rates starting to rocket and so I needed a long term low rate fix.

I should have the cash to clear the mortgage when my fixed rate ends in a few years time, but I’ll probably harvest a couple more cashbacks before I do.

So it’s definitely possible, but from experience you might have to space them out a bit more than you’re planning to. The generally slightly higher rates on cashback mortgages will eat into your profit a bit but still worthwhile.

 

[skrooge]

Is this something you heard of being pulled before? When switching, is there not a process of cross over between banks, i.e Bank B would see clearly you've started with Bank A, and therefore couldn't be fooled?

If the aim is to switch between all lenders in a short period of time it would be hard for bank B to see anything. After all you won't pay your first mortgage payment until a month after the process has kicked off.

If shortly before drawdown 1 you have mortgage approval signed off from each of the lenders, then lender 2-4(?) are unlikely to run a fresh credit check just before drawdown. You've passed all their tests last week having proven yourself sensible in the previous 6 months - job done. Now if it drags out for months they're more likely to do a spot check.

Your solicitor will know all but they may choose not to volunteer the information to any of the lenders.

Thanks. Is the main reason for this that, if Bank B thought you were just simply switching, they are likely to flag it due to the near zero time spent with the Bank A, going against their time with previous lender policy?

That's it's basically.

Put it this way. You've just taken out a loan (with bank A) that is at the limit of bank Bs risk appetite and you're asking them not to perform due diligence on this material change to your circumstances. While the net effect might be the same i.e., same house same(ish) mortgage amount, that extra step is material from the new lenders perspective. (If they know about it).

Loan will be c. 345000euro

So in simple terms each switch will earn you €6,900 gross. So as long as switching costs are less than that it's potentially profitable. I would hope the cost of one switch - regardless of any repeat business discount - would be a lot less than that.

 

[misemoi]

We were one of those multiple switchers, albeit over a longer period and well into our term so ltv and lti were lower than yours will be. I guess make a plan for switching with all the variables of minimum mortgage period, rates etc and you should be able to structure a path to maximise cash backs. However, read your documentation carefully. You can't be a ftb more than once and should not be presenting yourself as one if you aren't. If you are using htb for eg, would the second lender not query why you are not using it ?

As long as you are able to gain from it after all costs, it is always a worthwhile process. Your hourly rate for the admin will usually be far higher than your day job! And if y
You're really sensible, you'll put the gains against your mortgage. And throughout the lifetime of your loan, always be ready to switch if the numbers make sense.

 

[patconn]

I had similar plans when we drew down 3 years ago. Main problem I ran into was all banks (except AIB) required me to have 6 months with current lender before allowing me to switch.

Thanks for this. Great to have a more recent example and to know you got something for your troubles at least. If you don’t mind me asking;

1. Were you a first time buyer?
2. Did you borrow over x4 combined salary on first instance?
3. Did you attempt to cod the banks into thinking they were 1st in the queue, or did you set out for switcher mortgage cash backs?
4. What banks did you try out? To clarify, you went Bank A, took their cash back, switched to AIB, took their cash, stayed with them?
5. Did you switch as soon as you received confirmation of draw down, or waited until the cash backs came in 2 months?

Appreciate it.

 

[Zion2022]

Were you a first time buyer?

Yes

2. Did you borrow over x4 combined salary on first instance?

No, more like 2.5x

Did you attempt to cod the banks into thinking they were 1st in the queue, or did you set out for switcher mortgage cash backs?

No I tried legit switcher a few weeks after dust had settled on initial drawdown

What banks did you try out? To clarify, you went Bank A, took their cash back, switched to AIB, took their cash, stayed with them?

Yes this was it. EBS and BOI wouldn’t deal with me. A broker told me AIB wouldn’t either but I called them direct and they said since it was such a low LTI and LTV they would make an exception. Normally they require 6 months with existing lender.

Did you switch as soon as you received confirmation of draw down, or waited until the cash backs came in 2 months?

i (attempted to start) the process pretty much straight away but granted I did not do what you are planning and have the full suite of lenders ready to go. I’m by no means an expert but I’d be surprised if the banks didn’t do some final checks before drawdown. Granted you have good intentions, but if what you’re planning works there’d be nothing stopping someone taking out many many mortgages on the same property and bolting. Surely they have mechanisms to prevent this? Similarly I’d have thought the loan back would have had information to the effect of you being a FTB and buying a property which did not have any existing loan obligations on it. Do you have a solicitor on board already for the plan?

 

[patconn]

If the aim is to switch between all lenders in a short period of time it would be hard for bank B to see anything. After all you won't pay your first mortgage payment until a month after the process has kicked off.

Got it. Cheers for this.

If shortly before drawdown 1 you have mortgage approval signed off from each of the lenders, then lender 2-4(?) are unlikely to run a fresh credit check just before drawdown

Noted. Another commenter has highlighted the potential pitfall of Bank B and so on wondering where the HTB funding stated in the mortgage application is. One option I can think of is get a loan off a family member equal to (plus change) the HTB funding but put it down as a gift on all the mortgage applications, that way sufficient funds of 10% of the value of the property would be evident in the account if someone did a last minute check. Keen to hear your thoughts on the above if you’d like to add anything.

 

[misemoi]

Have you spoken to a solicitor on this ? They need to give specific undertakings to repay mortgages on switches etc. If you are thinking of presenting your application. As something other than truthfully you might struggle to get one to do the work. Or at least if you did I would be wary of dealing with such a professional ! As I said we did multiple switches and benefited a lot from cashback and lower rates but did so by being honest in all of our dealings with the banks. It just took slightly longer than your plan proposes but it was optimised. Thr best benefit I got was from learning to pay attention to the largest payment going out of our bank accounts each month. That education was invaluable.

 

[patconn]

I guess make a plan for switching with all the variables of minimum mortgage period, rates etc and you should be able to structure a path to maximise cash backs. However, read your documentation carefully. You can't be a ftb more than once and should not be presenting yourself as one if you aren't. If you are using htb for eg, would the second lender not query why you are not using it ?

Thanks for the advice. I hadn’t actually thought about the HTB funding issue, fair play. That sounds like it could be a deal breaker alright. If I have sufficient funds in the account at the time draw down whereby the HTB funding is not necessary to reach the 10%, I wonder would this help my case in the event of a last minute check by Bank B before draw down, or would they flag it as it is due process for them to see proof of this being released by revenue?

if y
You're really sensible, you'll put the gains against your mortgage. And throughout the lifetime of your loan, always be ready to switch if the numbers make sense

That’s the plan.
Fingers crossed. Will definitely be ready to switch at any time.

Have you spoken to a solicitor on this ?

No I haven’t, still sussing this out. I take your point on being honest with the banks, I do have a feeling a solicitor willing to do this will be hard to come by! In any case, switches will get me some cash back in the future if this plan doesn’t work out.