19 Buy to let mortgages with AIB - unfair restructuring offer

H

homes

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Dear Brendan and all

I would really appreciate what you think of what AIB offered me when I went back to restructure Morgages

I feel they are treating me very unfairly

I am 40 years old and full time landlord own 19 houses all with AIB 18 AIB mortgages = 12 houses on tracker and 7 on buy to let rates I have never defaulted no arrears no late payments and the 7 buy to let have only 10 years remaining on their mortgages I also have all house insurances savings all with AIB Bank

I went back to AIB to have the mortgages restructured because the rents have fallen and I am using savings to keep up with the repayments My request was for AIB to push out all the years

The only thing AIB offered me was one year interest only but for that they want two properties put on the market immediately and all cross securitised and on the sale of any of them the AIB would recieve the full proceeds of sale and use same to reduce the total debt

I lost my tracker rate on the 7 that are now buy to let rate when I extented interest only but was never told I would not get tracker rate back

None of the houses are connected they are all principal sumed

Await your replies
 
There is no reason at all for AIB to restructure mortgages which are on cheap trackers. These are loss-making so it's in their interests to encourage you off them.

The fact that the rent has gone down is not really that relevant.

Your priority must be to protect your cheap trackers.

While the one year interest only deal seems very generous of them, I would be concerned that they would set the proceeds of the 2 house sales against the cheap trackers and not the SVR mortgages.

You need to get control of your finances back. You should sell some of the properties - presumably those on SVR and use the proceeds to keep up your repayments on the cheap trackers. (There may be other factors such as tax relief on the interest, CGT exposure etc.)

savings all with AIB Bank
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If you have savings with AIB, you should be running them down so that you don't need rescheduling.

I also have all house insurances ...all with AIB Bank
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You should be shopping around.

I lost my tracker rate on the 7 that are now buy to let rate when I extented interest only but was never told I would not get tracker rate back
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This was very careless of you. As a professional landlord you should have been alert to the fact that you might lose the tracker rates. However, go back over the documentation. If it's not clear that you were switching to a SVR, then you may have grounds for complaint.

None of the houses are connected they are all principal sumed
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All of the houses are connected, in that they and the mortgages are in your name. If you sell a house for less than the mortgage amount, you still owe the shortfall and with plenty of other assets, AIB will go after you for it.

I don't know what "principal sumed" means


Brendan
 
Please note that AIB as with all banks are required to have a policy on BTL mortgages. This Policy is known as a MARS Policy and normally would not require you to place any property on the market provided that you can pay at least 5% of the total debt on a regular (monthly) schedule. Your post indicates that you have this ability. Rermember this is a minimum affordable amount and if a bank assessment of your circumstances indicates that you have an ability to pay a higher amount, then they are entitled to insist on the higher repayments being maintained. Contact the Bank and request a copy of their MARS policy.
 
Also just to advise you that the Bank can increase the interest margin in return for a renegotiation of loan repayments.
 
Sorry, I had to post that last post before I had finished.

the 7 buy to let have only 10 years remaining on their mortgages
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If there is only 10 years left, then they should be in good positive equity and you should consider selling them.




they want two properties put on the market immediately and all cross securitised and on the sale of any of them the AIB would recieve the full proceeds of sale and use same to reduce the total debt
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This is not an acceptable offer .

If you cross secure properties, you may find AIB being difficult when it comes to selling them. They may refuse permission or just mess you around.

As I have already said, it's probably good financial planning on your part to sell at least two houses, but you should decide which two to sell.

Brendan
 
Thanks 44 Brendan

for telling me about Mars policy . I would be prepared to pay more than the 5% as I think I can efford . I agree to except what I can pay its just to get back to that point I would like to hold out for another while as I have put money into these houses to which today to sell I will not get back if given a chance I would hope a price increase . The Market appears to be improving both in rental and sales
 
homes said:
Dear Brendan and all

I would really appreciate what you think of what AIB offered me when I went back to restructure Morgages

I feel they are treating me very unfairly

I am 40 years old and full time landlord own 19 houses all with AIB 18 AIB mortgages = 12 houses on tracker and 7 on buy to let rates I have never defaulted no arrears no late payments and the 7 buy to let have only 10 years remaining on their mortgages I also have all house insurances savings all with AIB Bank

I went back to AIB to have the mortgages restructured because the rents have fallen and I am using savings to keep up with the repayments My request was for AIB to push out all the years

The only thing AIB offered me was one year interest only but for that they want two properties put on the market immediately and all cross securitised and on the sale of any of them the AIB would recieve the full proceeds of sale and use same to reduce the total debt

I lost my tracker rate on the 7 that are now buy to let rate when I extented interest only but was never told I would not get tracker rate back

None of the houses are connected they are all principal sumed

Await your replies
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Sorry but where are the properties? You state here that rents have fallen yet in your later posts you state they are rising, which is it?

Check your documentation on the interest only extension, you would have been made aware (or it would at least have been included in the documentation) that the trackers would not be offered again if that was the case.
 
This whole focus on selling properties as being a first resort when a mortgagee of BTL units has a repayment problem is both unrealistic and in certain cases unreasonable. A bank must explore all reasonable options put forward by a client and help to achieve a result that will protect both its own position and that of the client. In my own experience I have come across a large number of cases where a client has BTL finance on a relatively short remaining loan term. The 5% sustainability test is there to allow the client some level of flexibility in agreeing a compromise solution with the Bank. I.e. If the client has the capacity to meet a 5% repayment then there is scope to restructure the loan facility. This can facilitate an allowance for some recovery in the market in the medium term, when sale can either clear the associated loan or reduce the residual amount of negative equity. In some cases it can allow time for the client to increase his repayment ability and restructure the loan(s) over a longer term.
 
Hi. Rather than speculating back and forward in what is clearly a critical matter for you my advice is rather simple though comes at a cost. You need to engage with a professional financial advisor immediately. I do not wish to be flippant or judging (apologies if it sounds like it), however I cannot believe that as a professional investor, given your facts above, you allowed the matter to get to where it is. You have 19 properties, many owned for a considerable period, there is no reason for you to be in such a position. If you do not have a strong financial advisor already, which I doubt, please go and get one. You need immediate financial advice or you risk losing significantly over time and threatening your entire portfolio.
 
44Brendan , I phoned my bank aout MARS they say MARS is only for three properties anymore than that goes to FSG at bank to make the decision . What do you think of that ?
 
Homes, is the rental income your main source of income?

MARS applies to 3 investment properties, any more investment properties than this and you are deemed a professional investor. If you can't repay the existing loans per the original agreements you are at their mercy to some extent.
However, you need an income to live off. If that only comes from the houses you may have an argument
 
Brendan

I did say to the bank I was prepared to take a 1% increase on tracker rate if they pushed out the years
 
Surely its very had to advise without having some info on the values, o/s loans, repayments, amounts of rents and tax position.

If your average rent is €800 pm then you could have a rent roll of €182,400, 75% of tracker interest amounts to what? do you have any Case V Capital Allowances to shield rent.

If property management is you full time job are you in a position to offer services to other owners or to Management Companies to generate some income in your own right.
 
Joe_90 said:
Surely its very had to advise without having some info on the values, o/s loans, repayments, amounts of rents and tax position.
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The initial question was "Is AIB being unfair?" and I think it's fairly easy to answer this. They are not.

After that we can set out some general principles

Your priority must be to protect your cheap trackers.

While the one year interest only deal seems very generous of them, I would be concerned that they would set the proceeds of the 2 house sales against the cheap trackers and not the SVR mortgages.

You need to get control of your finances back. You should sell some of the properties - presumably those on SVR and use the proceeds to keep up your repayments on the cheap trackers. (There may be other factors such as tax relief on the interest, CGT exposure etc.)
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With 19 properties I am surprised your accountant never advised purchasing sec 23 property?
Would you consider selling off a poor performer and buying a sec 23 property with the released cash?This would certainly reduce you tax bill and give some breathing room.
 
The key here is to sell a property and release cash as a reserve to keep up the repayments on the cheap trackers.

Tying up the cash in another property is not a good idea.

Brendan
 
Interesting thread. I'm unable to understand how the OP states his rents are going down, but elsewhere in the main rents are rising.
 
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