Wednesday 26 October 2016

Bank of Ireland to pay customers €4,500 to take out €150,000 mortgage

Charlie Weston Personal Finance Editor

Published 29/08/2016 | 12:42

Bank of Ireland on College Green. Photo: Collins Photos
Bank of Ireland on College Green. Photo: Collins Photos

BANK of Ireland has been forced to bring in a new cash-back deal for mortgage customers.

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It is adding a loyalty payment to its cash lump sum offer to stop new customers moving to another lender inside five years.

This will effectively increase its original cash-back offer from 2pc to 3pc.

Bank of Ireland was the first to a cash-back offer for buyers, a move that has seen it hoovering up mortgage business.

Its original offer gives mortgage customers 2pc of the value of the mortgage that is drawn down. This means new customers get a €4,000 lump sum on a €200,000 mortgage.

Permanent TSB and EBS responded by offering similar deals.

However, Bank of Ireland had a condition attached to this allowing it to clawback the cash if the mortgage holder paid off, or switched, the mortgage within five years of draw down.

But the bank has been forced to drop the claw-back threat after this was banned under an EU directive that was introduced earlier this year.

Bank of Ireland has reacted to this is by introducing a new cash-back offer with a loyalty payment after five years.

This is a bid to stop mortgage customers availing of the lump sum payment and then moving to a new lender.

Under the new Cashback Plus deal, Bank of Ireland is offering a 2pc cash lump sum, but adding an extra 1pc cash amount after five years.

The loyalty payment only applies to those who have a current account with the bank, and is paid after five years.

The old 2pc cash-back offer is still in place for those who do not have a current account with the bank. It also applies to investors and those taking out an equity release product.

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