Mortgage overpayment, cashback question

[Rationaleyes]

Hi All,

I am just curious as to the effective saving in interest overpaying a mortgage that includes cashback is. Not so great at math so I am guessing that a 2% cashback on overpayments does not just net me an effective saving of interest of 2%, sounds too good to be true. My current mortgage rate is 2.8% fixed for another 2.5 years or so. I get 2% back on that, (pay 510.20) 10.20 a month cashback. If I overpay 100 a month (saving 2.8% on interest) and get 2% cashback a month (2 euro back), what does the effective saving on interest end up. Anyone know how I would figure that out?

Thanks!

 

[Brendan Burgess]

I presume that this is a permanent tsb mortgage.

Very roughly:

If you have a mortgage of €100,000 a year at an interest rate of 2.8%, you will pay €2,800 in interest.

Your annual repayments would be around €6,000
So the "cash-back" on the repayments would be €120

So roughly speaking your interest less the cash back would be €2,700 interest.

So you reduce the effective rate from 2.8% to 2.7%

Brendan

 

[Rationaleyes]

Presumed correctly!

Great thanks Brendan helps me wrap my head around it and I'll be able to maths it out now from there. Much appreciated