PTSB 2% monthly cashback

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smndly

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Hi, trying to figure out the maths of this on APR.

Have AIP from PTSB at 3.7% for 35 year term. If I open an explore account I get 2% of cash back on monthly mortgage repayments. What would this mean for net APR. I think it reduces APR by approx 0.1% so overall APR would be 3.6%?
 

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Cashback (available to new customers only, but not available on the 4-year fixed rate):
  • 2% of the mortgage balance at drawdown
  • 2% of the monthly mortgage repayments back in cash every month until the end of 2027 (provided you open an Explore account, which has a €6 monthly fee) This is worth about 1/10th of 1% or €120 a year on a mortgage of €100,000.
 
smndly said:
I think it reduces APR by approx 0.1% so overall APR would be 3.6%?
Click to expand...
It's worth a bit more than that.

For every 100k borrowed at 3.7% for 35 years, the monthly repayment is €424.96.

A 2% discount reduces this to €416.46 which is equivalent to 3.55% or a 0.15% discount

A shorter term, e.g. 20 years, means the 2% has a bigger influence on the adjusted APR. It would be more like 3.47% or a 0.23% discount
 
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