New product to provide SSIA-style bonus for those saving for their mortgage deposit
Wednesday 20th January 2016: Bank of Ireland has launched a new MortgageSaver product, providing those saving for a first time mortgage with a bonus of up to 10%* on their savings. The offer is available to first time buyers who save in a MortgageSaver account to get mortgage ready and then draw down a Bank of Ireland mortgage to buy a home. The new product is designed to support first time buyers on the full journey towards home ownership, particularly those finding the requirement for an increased mortgage deposit challenging
First time buyers can save up to €80,000 in a MortgageSaver account and receive a bonus of 10% – a potential savings top-up of €8,000 from the Bank. Customers can save from €200 – €2,500 by direct debit per month and have the option to make a lump sum lodgement of up to €20,000. Customers with savings elsewhere can transfer up to €20,000 to the account and if they do so within 30 days, this amount will be included in the calculation of the bonus.
Research conducted by Red C on behalf of Bank of Ireland has shown that the majority of those planning to enter the property market, 70%, are saving to buy or build a home within the next two years. 36% of respondents are planning to buy a property on their own, and four in five respondents (80%) are currently saving for the deposit.
53% of respondents said that given the choice, they would prefer either a fixed rate or a combined fixed and variable rate for their mortgage, with 22% saying they would prefer a variable rate and 25% undecided.
The research also revealed the average figure which respondents said they would borrow is €240,000. Location is by far the most significant priority, however the size/number of bedrooms is of increasing importance. The majority (85%) of first time buyers surveyed said that they are paying rent, with the average monthly figure of just under €700 – an increase of €60 on similar research conducted last year.
Discussing the new product, Brian Vaughan, Head of Savings & Investments, Bank of Ireland commented: “We understand the issues faced by first time buyers saving for their first home, particularly with rents increasing steadily and a higher deposit required, which is a significant challenge for many. Residential data is showing that in many parts of the country monthly mortgage repayments are now lower than rental requirements, so while there is a logical rationale to buy a home, it’s harder than ever for first time buyers to save. Recent analysis also reveals that house prices regionally are still increasing, so across Ireland the issue of raising a deposit for a home is becoming more challenging.”
“We want to support first time buyers to kick-start their mortgage journey through MortgageSaver, providing an SSIA type top-up towards their savings for their home. The product is designed to be of maximum benefit to those who may be in the early stage of the journey and are getting mortgage ready by putting a monthly savings plan in place. This is the first savings account dedicated to helping customers get mortgage ready, and the 10% bonus is on top of the savings interest rate, so will make a real difference to our customers.”
How is the bonus calculated?
Example: James and Mary are saving for their first mortgage and hope to borrow €200k to buy a property. They save €1,500 per month in a joint MortgageSaver for 12 months. They lodge €15,000 to the account from existing savings.
|A.||Existing savings / Lump sum||€15,000||Lodged within 30 days, so included in bonus calculation|
|B.||Customer saves amount||€18,000|
|C.||Bonus 10% on total savings||€3,300||(A + B) x C (i.e. 10% of total eligible savings)|
Figures are for illustration purposes only and do not include the savings interest earned over the life of the account. MortgageSaver Bonus is subject to DIRT at the prevailing rate of 41%. The bonus is subject to a limit of 3% of the mortgage amount.
Customers can open their MortgageSaver account online, drop into a branch or by calling 1890 365 345 and have access to their funds at any Bank of Ireland branch or through 365 Online.
NOTE FOR EDITORS:
* How does the First Time Buyer MortgageSaver bonus work?
- 10% bonus is on the highest regular savings balance in the account, based on 24 months of savings. At the end of 24 months, customers will have a further 6 month window, should they require it, in which to close on a property purchase.
- If lump sums of up to a total of €20,000 are lodged to the MortgageSaver account within 30 days of opening, Bank of Ireland will include the lump sum in the 10% bonus calculation also.
- The bonus is subject to a limit of 3% of the First Time Buyer mortgage amount.
- The 10% bonus is not available in conjunction with any other Bank of Ireland offer.
- The Bonus will be paid net of DIRT to customers’ MortgageSaver account when the mortgage is drawn down. Customers may be able to avail of the DIRT refund legislated for by the Government, whereby FTB’s can reclaim the DIRT paid on interest earned on savings used to purchase a home. Full details at Revenue.ie.
- Customers must open the MortgageSaver account before 31st December 2016 and draw down a Bank of Ireland First Time Buyer mortgage within 30 months of opening the MortgageSaver account.
- In order to qualify for the 10% bonus, customers are required to save a minimum of €200, maximum of €2,500 per month for 6 consecutive months in the MortgageSaver Account, and cannot withdraw money from the account in the first 6 months.
- The Bank may seek refund of the Bonus payment from the customer if 50% or more of the mortgage is paid back within 5 years.