Should you accept this?
You are currently paying €9,600 interest a year
Under the split mortgage, this will reduce to €7,700 a year.
They are extending the term as well, so your repayments go down significantly.
So, on the face of it, this is a good deal, in that it is better than what you are on at the moment.
Is it sustainable?
We have been paying €600 a month which at that is crippling us
Has your income improved since you first posted? If €600 was crippling you, then €800 will be worse.
You are still left with €16,000 of unsecured debt which add to the unsustainability
Alternative 1 - A Personal Insolvency Arrangement
As you are in such heavy negative equity and as you can't afford the €800 a PIA may be a better alternative. If I was a PIP, I would suggest the following:
Reduce the mortgage to €120,000 - 20% above the market value of €100,000.
Repayments reduced to €600.
After 6 years, the shortfall would be written off.
EBS may well veto this arrangement. So their offer could be the Split Mortgage or nothing.
The other big advantage of a PIA is that your unsecured creditors would be settled as well.
Alternative 2 - Mortgage to rent scheme
It's not clear if you applied for this.
Alternative 3 - A voluntary sale of your home
You have stressed that you want to keep your home, but all the factors are pointing towards a voluntary sale of it.
Sell your home.
You will have a shortfall of €100k.
Ask EBS to write off the shortfall in return for your cooperation in selling the home and maximising the sales proceeds.
If they refuse, apply for a Debt Settlement Arrangement with a one year period.
If they veto that, apply for bankruptcy in Ireland or the UK.
You will not spend the next 32 years paying off negative equity.
You tick most of the factors in favour of the voluntary sale:
You can probably rent a similar home for less than €800 a month, so you will have more money in your pocket.
You have high negative equity
You are currently on very low income, so there is no point in EBS vetoing a DSA or insisting that it lasts for 5 years.
The alternative of a split mortgage is probably unsustainable anyway.
You are unemployed, so you might need to move for work
Other advantages in selling now
If your income improves, you keep it instead of giving it to the EBS.
If you get a lump-sum, you keep it instead of giving it to the EBS.
If you are dead set on keeping the family home ...
Then you should accept the Split Mortgage subject to the following amendment.
"The borrower has the right to sell the property at any time after July 2018. In the event the proceeds do not clear the Base Loan and the Split Loan, the shortfall would be written off. Any arrears on normal repayments would still be due"