AIB Buy To Let Restructuring Policy

P

#paul#

Registered User
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13
Hi,

I'm looking for some advice off anyone who has had experience of dealing with AIB regarding restructuring a BTL mortgage.

Summary:
Estimated Value of Property: €260k
Outstanding Balance: €265k
Mortgage Type: ECB plus 1.10%
Remaining Term: 16 years
Rental Income: €15.6k per annum
Current reduced repayments: €13.2k per annum
Full Principal & Interest Repayments: €18.1k per annum
Arrears: Nil

I bought this property at the height of the boom in 2007 for €400k with mortgage of €350k from AIB. I have been struggling in recent years to make up the shortfall between the rental income and full P&I repayments. I have requested a term extension of on number of occasions, e.g. extend the remaining term from 16 years to 25 years (I am 34 years of age) which will would reduce the repayments to c. €12k per year. This would make the mortgage affordable and sustainable for me with a clear repayment plan. AIB will only grant me a term extension on condition that I switch from my current tracker rate to a variable rate of 5.10% which means new higher repayments of €18.8k per annum (incorporating the term extension to 25 years). I am not going to go with this offer.

To be fair to AIB, I recognize that they are a business, they are not obliged to restructure the debt and they are entitled to seek some sort of upside for granting me the term extension but I believe what they are proposing is completely unreasonable. I am currently on reduced payments of €13.2k per annum. This arrangement is due to expire in December and given the recovery in property prices I expect them to ask me to sell the property rather than grant me a further year of reduced payments. I do not want to do this.

I'm frustrated as I have experience of dealing with another state-owned Bank who is happy to accept a similar proposal with no negative conditions attached.

I would appreciate any advice from people who has had direct experience negotiating with AIB or can offer general advice on how I should approach this.
 
I think the only way they are going to accept a proposal is if you prove to them you cant pay the extra. To do this you will need to contact one of their mortgage advisors https://personal.aib.ie/content/dam...loans/mortgage-arrears-resolution-process.pdf "This process aims to engage with, support and find resolution for our mortgage customers who are in arrears, or are at risk of going into arrears."
Explain to them that you wont be able to pay fully in January and could they outline the options available to you. It will involve you providing a Standard financial statement etc.
 
kmick said:
I think the only way they are going to accept a proposal is if you prove to them you cant pay the extra. To do this you will need to contact one of their mortgage advisors https://personal.aib.ie/content/dam...loans/mortgage-arrears-resolution-process.pdf "This process aims to engage with, support and find resolution for our mortgage customers who are in arrears, or are at risk of going into arrears."
Explain to them that you wont be able to pay fully in January and could they outline the options available to you. It will involve you providing a Standard financial statement etc.
Click to expand...

Many thanks for the reply kmick but unfortunately AIB have told me be that MARP doesn't apply as it is not my family home or the only property I own in the State.

AIB accept that I don't have the means to pay the extra each month and are saying that I will need to sell the property rather than grant a term extension as long term solution. I expect them to be more forceful in this approach when the current reduced payments period ends in December as the property is now nearly out of negative equity.

It is my preference not to sell as I feel that I have gotten this far through the rough times and I'm nearly out the other side.
 
#paul#
-is this your own buy to let?
- do you have an additional principal private residence?
- is it securing the buy to let or vice versa?
 
You have a contract with them. If you can't keep to your side of the contract, then they have the right to ask you to sell the house. It sounds as if they have been very flexible so far in allowing you to keep the property.

However, this is a very profitable investment for you.

You are getting rent of €15.6k and the interest is only about €3k, so you are making a profit before expenses and tax of €12k.

#paul# said:
I'm frustrated as I have experience of dealing with another state-owned Bank who is happy to accept a similar proposal with no negative conditions attached.
Click to expand...

Do you have equity in the other property? Can you sell it and keep up the repayments on your AIB property?

Can you borrow money from anyone to make up the shortfall? Obviously it would have to be a cheap loan, but it would enable you to retain this very profitable investment.

Black Adder's point is that if you had no other property, your buy to let would be covered by the CCMA. But it appears that you have at least one other property.

Get your solicitor to have a look at your mortgage contract. If AIB has the right to appoint a Receiver, then you are snookered as they can and will do so. If they don't have a contractual right to appoint a Receiver, then you can tough it out with them. Pay with you can and await developments. They will have to take you to court and get an order for possession. This will take them a couple of years, and if your finances improve in the meantime and you can meet your repayments, then they will probably not succeed in getting an order.

Brendan
 
Paul, AIB will not extend this facility without converting it to their standard rate for BTL facilities. You have until December to make your own decision and can apply again for reduced payments which they may grant you. However, it is likely that a pre-condition of any reduced payment agreement will be that you put the property on the market. This may not be your preferred option but at least it will give you the time and flexibility to maximize the price you get for the property and potentially clear the loan balance in full.
Taking an adversarial approach will buy you time but ultimately AIB will re-possess the property and you may well end up with a shortfall to pay if they do not achieve the maximum price for the property.
 
I am in agreement with the points above. I just wish to query how you are able to fund all the outgoings like LPT, Insurance, repairs and renewals. I would imagine that it is making a paper profit from your figures and as a result you have various tax liabilities. Have you a cash flow problem because of the outgoings. I appreciate why you would want to keep the property but you need to take account of all outgoings. Hope it works out for you.
 
Many thanks for all the replies.

Brendan - Interesting point and I will definitely look further into the Bank's right to appoint a Receiver. If they cannot, then I would be tempted to let it go down the legal route in the hope that my circumstances improve in the near future.

Dermot - outgoings (tax & expenses) is covered between the current rental surplus of €2.4k per annum and also my personal income. The issue is that my personal income will not stretch far enough to also cover the repayment shortfall (to make full principal and interest repayments) of an additional €5k per annum. Although I am hopeful that my personal income will improve slightly over the next year - there is no guarantee of this.
 
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