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%?
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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
 
_OkGo_ said:
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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That's a good point. But it would all be a bit easier if they just charged better rates to existing customers after the initial sweetheart rate.
 
lff12 said:
That's a good point. But it would all be a bit easier if they just charged better rates to existing customers after the initial sweetheart rate.
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Exactly. These kinds of upfront (at loan drawdown) and ongoing monthly cashback gimmicks are a complicated distraction from the fundamental underlying cost of credit which is what ultimately matters to consumers.
 
I had a quick look at this and I think it does not apply if your mortgage is a buy-to-let loan. If you have a previous ulster bank mortgage that transferred you may get the cash back.
Also to hold an explore account you pay €8.00 per month but can get up to €5 back if you use your card for transactions.
 
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