AIB old thread - Prevailing rate cohort and split mortgages

[LicketySplit]

This thread is very confusing.

I have summarised how they are actually doing it in this thread

AIB - How AIB is dealing with split mortgages in the Prevailing Rate cohort

I spoke to the bank today, they took note of all my queries and they will came back to me next week. 1. Regarding the written off, they are still working on the calculations of my case and the 24k it seems to be a first payment. But they couldn't say the base and I will have to wait till next...

askaboutmoney.com

Brendan

Hi Lickety Split

I cannot comment on any proposal which AIB might offer customers until they publish the details.

But you need to lower your expectations dramatically.

AIB had the most generous split mortgage arrangements of all the lenders

1. They were the only lender to park the warehoused part permanently with no review
2. They were the only lender to write down the mortgage balance. In fact, most of the other lenders refuse to write off the shortfall even after the borrower has lost their home.

You got a great deal.





No other lender would have written off any of the mortgage and left you in their home.
No other lender would have parked the warehouse permanently without a review.

If and it's a bit IF , the principles of the Central Bank's previous scheme are applied, then you would be put back in the position you would have been had you been put on the tracker from the appropriate date.

Think about that and you won't like the result.

You have not given us enough numbers, but let me assume it was a mortgage of €600k and that whenever the deal was done, you still owed €600k due to arrears.

In 2011, let's say AIB gave you a tracker of ECB +1.5%.
Fantastic, but would you have been still able to make your full mortgage repayments? I suspect not but only you can answer this.

If you would have been able to make your full mortgage repayments, then you would not have needed a split mortgage.

So today, you would owe let's say €540k as you would have paid down some of the capital.

Under the extraordinarily generous split mortgage you got from AIB, you are now in the following situation:

Real mortgage: €360k (60% of €600k)
Permanently warehoused at 0% interest : €192k. (32% of €600k)

For your sake, I hope that AIB does not offer to put you back in the position you would have been in had they offered you a tracker mortgage back in 2011. You will owe €540k @ 1.5% instead of €360k @ 3.15% with €192k payable in 20 years time.


Brendan

Hi Brendan

We received the capital write-down today.

It appears that they calculated the 12% off the 2014 base loan (active loan element following the split). This capital value seems to have been backdated to 2011 and the 12% calculated off this.

We haven't received any correspondence from AIB regarding possibly reverting to the position we might have been in had we received a tracker. At this stage, given the write down has been processed, I find this quite unlikely.

 

[Introuble83]

Hi Brendan

We received the capital write-down today.

It appears that they calculated the 12% off the 2014 base loan (active loan element following the split). This capital value seems to have been backdated to 2011 and the 12% calculated off this.

We haven't received any correspondence from AIB regarding possibly reverting to the position we might have been in had we received a tracker. At this stage, given the write down has been processed, I find this quite unlikely.

Mine has been adjusted in the same way . This seems contrary with the FSPO ruling ? I will need to see there calculations before I can get my head around it

 

[Brendan Burgess]

That is amazing.

The FSPO ruling said nothing about split mortgages, so I can't see how it is contrary to it?

If you can afford to resume full repayments on your full new mortgage balance, then you should do so.

Ask them to reverse the split and correct your credit record.

If you are certain sure that you are never going to borrow again, then you might prefer not to do that.

Brendan

 

[Brendan Burgess]

Sorry, I may have misunderstood.

Could one of you provide the following information

1) Date first fixed rate ended
2) Balance of your mortgage on that date
3) Date split mortgage agreed.

I just assumed that the split came after the fixed rate ended. If the split was before the fixed rate ended, it would be an interesting conundrum.

Your complaint would be that you were not offered a tracker. But if they offered you 0% instead, then you have done much better on that part of the loan.

Brendan

 

[Introuble83]

Sorry, I may have misunderstood.

Could one of you provide the following information

1) Date first fixed rate ended
2) Balance of your mortgage on that date
3) Date split mortgage agreed.

I just assumed that the split came after the fixed rate ended. If the split was before the fixed rate ended, it would be an interesting conundrum.

Your complaint would be that you were not offered a tracker. But if they offered you 0% instead, then you have done much better on that part of the loan.

Brendan

No the split came in 2014. I came off the fixed in 2011. I will dig out the numbers for you tomorrow

 

[Introuble83]

That is amazing.

The FSPO ruling said nothing about split mortgages, so I can't see how it is contrary to it?

If you can afford to resume full repayments on your full new mortgage balance, then you should do so.

Ask them to reverse the split and correct your credit record.

If you are certain sure that you are never going to borrow again, then you might prefer not to do that.

Brendan

My original plan was to do just that . Put the split back into the active loan thus increasing the payments . I can afford it . However it’s an unusual decision. Pay zero interest now with a lump at the end or put it back in and pay the associated interest. Is the price you pay worth the restoration of your credit rating ? That’s not an easy decision

 

[Brendan Burgess]

Is the price you pay worth the restoration of your credit rating ? That’s not an easy decision

It depends on the numbers.

If you have a warehouse of €20,000 with 10 years left on your mortgage, and you might want to trade up in the next 5 years, it's an easy decision.

If you have €100k split with 20 years left and you are living in your forever home, it's also an easy decision.

The difficult decisions are in between that.

Brendan

 

[Introuble83]

It depends on the numbers.

If you have a warehouse of €20,000 with 10 years left on your mortgage, and you might want to trade up in the next 5 years, it's an easy decision.

If you have €100k split with 20 years left and you are living in your forever home, it's also an easy decision.

The difficult decisions are in between that.

Brendan

28 years left on the mortgage . 63k split . I definitely will want to move or extend in the next 20 years . Will a lender decline an application for holding a split mortgage is the real question I guess ? It does not affect repayment capacity or credit rating per se . It just shows up as a facility /deferral on CCR. That’s my understanding anyway

 

[Brendan Burgess]

I would be really surprised if a lender offered anyone with a non-performing loan a mortgage.

Brendan

 

[LicketySplit]

Mine has been adjusted in the same way . This seems contrary with the FSPO ruling ? I will need to see there calculations before I can get my head around it

Having written off 12% of the active part of the split mortgage yesterday, today we saw that they have also written down 12% of the warehoused element of the loan. Delighted to say the least.

 

[Emerald79]

Just called Aib and our active part got written down by 12% too, backdated to when we came off our fixed rate so we should get some interest payments back too. Wasn’t expecting that. Thought it would all come of warehoused amount.
No reduction on our warehoused amount yet but she said they are working on them at the moment. Absolutely delighted with this

 

[Patrick200]

I would be really surprised if a lender offered anyone with a non-performing loan a mortgage.

Brendan

Hi,
Just regarding the classification of Aib split mortgages I found the attached image from Michael Mc Grath regarding Aibs split loans. Would anyone know if it is true that they are classified as “performing”. I have a split mortgage too from Aib& it would be a great help as when this is all over I plan to trade up/ move house, thanks

 

[Rarrrrrr]

I think the above image refers to the accounting treatment of that type of loan by the bank, not the individual borrowers history/ credit record.

 

[Brendan Burgess]

Correct.

AIB has made a 100% provision in its accounts for the warehoused part of split loans, so they can treat the loan as performing in their accounts.

This has no relevance.

My understanding is that anyone who has a mortgage on which they are not paying the scheduled amount has an impaired credit rating.

Brendan

 

[Patrick200]

Thanks

 

[ladybirdy2020]

Hi. I'm in the same situation. First, I understood that the 12% would be from the date we came off the fixed rate. In my case it was 2011. The bank offered split mortgage in 2015. Today, I saw in my bank account an amount related only to the 2015 performing part of the split.
This doesn't seem correct to me.
Second, in contract any lump sum should go to the freeze part and in the first 5 years, any lump sum should be increased by 30% by the bank. So if I put 7000euro the bank would put another 3000euro. Would not this money be considered a lump sum?

 

[Introuble83]

Hi. I'm in the same situation. First, I understood that the 12% would be from the date we came off the fixed rate. In my case it was 2011. The bank offered split mortgage in 2015. Today, I saw in my bank account an amount related only to the 2015 performing part of the split.
This doesn't seem correct to me.
Second, in contract any lump sum should go to the freeze part and in the first 5 years, any lump sum should be increased by 30% by the bank. So if I put 7000euro the bank would put another 3000euro. Would not this money be considered a lump sum?

You make a very valid point but you might have a job in convincing them to upgrade their own lodgement

 

[Brendan Burgess]

Could someone please provide all the figures in one post. Not bits of them spread over a number of posts.

Date came off fixed rate :
Balance when coming off fixed rate:
Date mortgage split:
Active part when split:
Amount warehoused:

Balance on active part just before write down:
Amount written down off active part:

Balance on warehouse before write down:
Amount written down off active part:

Brendan

 

[Brendan Burgess]

Please do not post any further questions or replies in this thread until we have one post with the above clear information.

Thanks

Brendan

 

[Introuble83]

M

I spoke to the bank today, they took note of all my queries and they will came back to me next week.

1. Regarding the written off, they are still working on the calculations of my case and the 24k it seems to be a first payment. But they couldn't say the base and I will have to wait till next week or the letter.
2. Regarding this money be considered a lump sum, and therefore eligible for a further 30% amount as per my contract. They will look into it and revert back on Monday. Fingers crossed.

Date came off fixed rate : 01/09/2011
Balance when coming off fixed rate: not sure (bank doesn't say) but approx. 327k
Date mortgage split: 4th August 2015
Active part when split: 196k
Amount warehoused: 108k

Balance on active part just before write down: 174k
Amount written down off active part: 24k

Balance on warehouse before write down: 108k
Amount written down off warehouse part: 0

many thanks for the update . I am in the same position