Should you choose a cashback mortgage?
Costs can spiral when you buy a property or switch, so a cashback mortgage can provide a boost when you need it most. Here’s all you need to know about cashback mortgages in Ireland.
What is a cashback mortgage?
It’s a mortgage that gives you money back as a cash lump sum when you complete. The cash is either:
- A percentage of the mortgage e.g. 3%, or
- A fixed lump sum, such as €1,000
Several mortgage lenders in Ireland offer cashback to help pay professional or legal fees.
How do cashback mortgages work?
Cashback mortgages work by releasing funds from the money you borrow.
The cash is normally paid in one lump sum directly into your bank account after you draw down your mortgage. You will normally get the cash within two months of completion, although some banks may provide the cash upfront.
Some lenders also offer monthly cashback, but only if you have a current account with your mortgage provider. You won’t have to pay tax on the cash amount.
How much cashback could you get?
Mortgage cashback is typically around €2,000, although if you choose a mortgage cashback deal based on a percentage of your mortgage, then the higher your mortgage, the more cashback you are eligible for.
Which banks offer cashback mortgages?
Five mortgage lenders offer cashback mortgages in Ireland at the moment but check the terms & conditions before you apply.
Here’s an overview of the cashback deals running at the moment.
| Lender | First time buyers | Switchers | Additional info | |
|---|---|---|---|---|
| AIB | - | €3,000 | ||
| Avant Money | - | 1% | Available until 29th November 2024 | |
| Bank of Ireland | Up to 3% | Up to 3% | 2% plus 1% in 5 years for BOI account holders | |
| EBS | Up to 3% | €3,000* | 2% plus 1% in 5 years *4 year Green fixed rate mortgage only | |
| Haven | Up to €5,000 | Up to €5,000 | Eligible for mortgages over €250,000 | |
| MoCo | €1,500 | €1,500 | All mortgage customers eligible | |
| PTSB | 2% | 2% | 2% monthly offer for Explore account holders who pay their mortgage by direct debit |
Is there a limit to the amount of cashback?
No, most banks don’t limit how much cashback you can receive.
If you’re taking out a particularly large mortgage with a lender it’s advisable to confirm how much cashback you’ll get on your mortgage amount.
Here’s an example
| Mortgage amount | 1% cashback | 2% cashback | |
|---|---|---|---|
| €100,00 | €1,000 | €2,000 | |
| €150,000 | €1,500 | €3,000 | |
| €250,000 | €2,500 | €5,000 | |
| €300,000 | €3,000 | €6,000 |
Who can get a cashback mortgage?
Cashback mortgages are available to most borrowers, including:
Eligibility criteria for cashback differs between lenders and is subject to their terms and conditions.
Is a cashback mortgage a good idea?
Although receiving a lump sum of cash may be a relief for many home buyers, some cashback offers tend to have a higher interest rate than other mortgages, so it’s important to always check the overall cost of credit over the lifetime of your loan.
A mortgage deal with a lower interest rate, even just 1.5%, could save you thousands over the full duration of the loan.
Pros and cons of cashback mortgages
While cashback mortgages provide a helping hand when money is tight, there are other factors to consider.
Here’s a look at the pros and cons of cashback mortgages:
Pros
Cons
Can you switch mortgage provider if you take a cashback offer?
Yes, you can switch as often as you like. Under the EU’s Mortgage Credit Directive from 2014, banks can’t claw back any cash that has been paid out as part of your mortgage.
However, there may be conditions around overpayment, and if you are on a fixed-term deal, you’ll be liable for breakage fees and any other switching costs.
If you’re on a fixed-rate mortgage and switch before the end of your contract, you could be charged a fee.
How to choose the best cashback mortgage offer
Once you’ve weighed up the short-term advantage of a cashback mortgage with the overall long-term cost of the mortgage, use our free mortgage comparison tool to find the best cashback deals and compare lenders.
Our simple mortgage calculator allows you to tailor your results using property value, mortgage amount and repayment term.
When you are choosing a cashback mortgage, consider:
It’s a good idea to use a broker if you are considering a cashback mortgage. A broker can calculate the mortgage’s overall cost and determine how much you could save or lose by opting for a cashback mortgage.
Always check the terms and conditions carefully before applying for a cashback mortgage so you don’t get caught out by hidden charges or specific conditions.
Where to find out more about mortgages
We have lots of helpful information to guide you through whatever stage of the housing ladder you are on.
For first time buyers our guides on how to prepare for a mortgage application and getting an Approval in Principle will help get you started.
If you are planning to remortgage or move house, our guide, How to switch to a better mortgage deal, provides helpful information for choosing the best deals.
If you are unsure where to start your house buying journey, Your complete guide to mortgages is a great place to begin.
Cashback mortgages FAQs
Can I get a cashback mortgage on a buy to let property?
Yes, but it depends on the lender. Some do not offer mortgage cashback deals for buy to let investors.
Check the eligibility criteria for each bank or lender to see if you qualify.
Do I have to pay tax on the cashback?
No, any mortgage cashback you get is tax-free.
What does APRC mean?
APRC stands for Annual Percentage Rate of Charge (APRC) and indicates the total cost of your mortgage over its term, taking into account the interest rate charged and other costs such as valuation fees paid to the Property Registration Authority (PRA).
The APRC is expressed as an annual rate and credit providers must display it when advertising loans and borrowing rates.
The Interest Rate is the rate at which interest is charged on the amount you borrow, so the figure is always lower.
Compare mortgage rates & deals
Find a range of first time buyer and home mover mortgage deals in Ireland using our comparison.
