AIB neg equity mortgage

kkmaan

Registered User
Messages
57
Well Folks,
State of emergency here and looking for advice.
I applied for the above with AIB.
I have numerous communication e mails stating that the way it works is that that the neg equity is transferred to the new loan amount and carry on from there. I am cleared for the amount sought.
However, i just sale agreed my house today and am almost sale agreed on another house i am buying.
I get a call to go into the bank today to go over the mortgage details.
They tell me today that the neg equity is paid in a separate loan over 7 years. the loan for the new house is over 25 years. This means the repayments are almost double what we were expecting. Shocking news, now the whole thing could fall apart because AIB wont honour their agreement.
I have it down in black and white by e mails from the mortgage advisor over the last 6 months in 34 e mails and not once is seperate loan terms and time periods mentioned - just one new loan with neg equity absorbed.
I have told the manager all of the above, and they still wont honour their agreement - they said they will be in contact soon.
Nowhere does it mention anything about this in their neg equity mortgage handbook online either.
The thing I am most worried about is that AIB will stall on this and i will lose the new house.
Any advice appreciated!
 
This sounds a little strange. From your posting you are stating that you have been approved for a negative equity mortgage. You also state that you have been sent e-mail approving this mortgage (very unusual as Banks do not approve anything by e-mail!). Now when you are in the process of conclusion of both properties the Bank has ignored e-mail correspondence/agreements and has considerably shortened the period attaching to the negative equity portion of the mortgage.
A little late now to hear this, but any e-mail discussions should only be treated as such until a formal approval letter is issued. Read the e-mails again! I very much doubt that they explicitly state that the facility has been approved on the terms of your existing mortgage. However, if they do you have a solid case to revert to the Bank with. Normally an e-mail discussion would advise that the terms quoted are subject to formal approval. However, the insertion of a 7 year repayment term makes no sense if it is beyond your affordability!!!
 
I'm assuming this is a non MARP related case and if so i think you either got the wrong end of the stick or staff member got the process wrong.
When you sell your house, the remaining balance is set over a new term, max 20 yrs, this can be lower though. When you buy the new property the balance is then transferred to the new loan on the new loan term. You should only have one loan account at that stage although this is not always the case e.g if a tracker rate is involved they will usually split the loan
 
Agree with SwordsMan, but just to expand the explanation a bit.

AIB gives you sanction to sell your home in negative equity.
This will leave you with a shortfall which is payable over a fixed term i.e. 7 years in your case.

If you do not buy another house, you repay the shortfall over the 7 years. This is fair enough as it's an unsecured loan.

If you buy another house, they give you a mortgage for the new house + a lump to clear the shortfall immediately. So in effect, you are paying the negative equity off over the full term of the new mortgage i.e. 25 years.

It is a bit different for a tracker, but I assume you have an SVR loan.
 
Agree with SwordsMan, but just to expand the explanation a bit.

AIB gives you sanction to sell your home in negative equity.
This will leave you with a shortfall which is payable over a fixed term i.e. 7 years in your case.

If you do not buy another house, you repay the shortfall over the 7 years. This is fair enough as it's an unsecured loan.

If you buy another house, they give you a mortgage for the new house + a lump to clear the shortfall immediately. So in effect, you are paying the negative equity off over the full term of the new mortgage i.e. 25 years.

It is a bit different for a tracker, but I assume you have an SVR loan.
Brendan, your explanation is spot on.
The Mortgage manager made the mistake, she thought that even if i draw down on the new mortgage, the 7 year period for the neg equity is treated seperatly. You are right, if i dont draw down the neg equity period is 7 years - if i do draw the neg equity is absorbed into the new loan term.
Got an official apology from AIB - All good now...
 
Just thought I would give some feedback on the eventual outcome with a neg equity trade up mortgage.
I eventually managed to sell and buy almost simultaneously, something even the bank were amazed at. Most of neg equity mortgages do not work out for a variety of reasons apparently, but mine did thank god.
You would simply not believe the amount of hoops that I had to jump through by AIB to get this to work. Numerous times along the way I met a dead end with no way forward but eventually found a way. Stress like you would not believe. I would not recommend using a neg equity trade up mortgage unless you really have to. The best advice I can give is never communicate with the bank verbally - everything by e mail or letter.
Anyway, thank god it worked out eventually.
 
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