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Bank now offering 10pc bonus to customers who pay off their entire homeloan

A bank is offering a 10pc bonus to homeowners who can pay off their entire mortgage with a lump sum.

Permanent TSB has eased the terms on its tracker mortgage bonus scheme in a bid to get more customers to pay down their loans early.

The bank will now allow anyone who has the funds to pay off the entire mortgage and get a 10pc discount on the overpayment.

Up to now, mortgage holders could only pay off half the mortgage. But now someone who is selling their house will be able to benefit from the 10pc bonus deal.

Under the deal, someone who has a €110,000 mortgage could clear their entire debt by paying a lump sum of €100,000.

The deal is open to tracker holders whether their mortgage is residential, commercial or buy-to-let. About 850 people have so far either entered into the scheme or committed to doing so.

A spokesman for the lender denied that it was forced into the change because of a disappointing take-up of the initial incentive plan.

Six out of 10 Permanent TSB mortgages are trackers, with these home loans costing the lender around €400m a year.

Tracker mortgages are a problem for banks because they have low interest rates -- which can only rise when the European Central Bank (ECB) decides to increase rates.

Some of Permanent TSB's borrowers have tracker rates as low as 0.75pc above the ECB rate.

This means these people have a mortgage rate of 2pc, compared with variable rates, which are as high as 5.19pc.

Irish Independent