Cautious welcome for Bank of Ireland negative equity mortgage plan
BANK OF Ireland’s plans to allow customers in negative equity to trade up or down by transferring a portion of their existing loan to new mortgages has been cautiously welcomed by industry experts.
However, concern has been expressed that many would-be borrowers would lose their tracker mortgages if they took advantage of the new loan facility. The bank announced yesterday that it planned to offer negative equity loans to homeowners who wished to buy a bigger property.
Under the new arrangements, customers will be allowed to trade up while carrying over an amount of negative equity to the new mortgage. It will also offer trade-down negative equity loans to allow customers move to a lower value property while carrying an amount of negative equity to the new mortgage.
Those customers with tracker mortgages who trade down may be able to hold on to their existing mortgage, but those who trade up will lose their loan terms.
All existing Bank of Ireland customers who want to avail of the new mortgages will be fully assessed to ensure they can afford the mortgage, the bank said.
The latest Central Bank figures indicate that in the region of 40 per cent of owner-occupiers are in negative equity.
Commenting on the bank’s proposal, the Professional Insurance Brokers Association’s chief operations officer Rachel Doyle said: “For those trading up, it is far too restrictive and unappealing that they cannot take their tracker mortgage with them, even in part.”
Alternatively, she said, the bank should discount the new mortgage by a substantial amount to take into account the fact that the mortgage holder is forfeiting the tracker rate.