She should not pay off the mortgage on her PPR. She should conserve her cash.
Unless she is entitled to a tracker at the end of her fixed rate period, she should probably sell the apartment.
Haven will allow her to transfer the Negative Equity to a new property.
This is really important. If she is in negative equity, the new Central Bank lending restrictions will not apply to her.
If she pays off her negative equity, then she will be treated as a second time buyer and will need a deposit of 80% and max of 3.5 times her salary.
If she decides to keep her apartment as an investment, she will pay the Haven SVR for home loans which is about 3.75%. As she can deduct 75% of this against the rent, the effective interest rate is reduced to 2.35% [(3.75 -(75% @50% tax rate) ].
Also by keeping her cash for her new PPR, she can minimise the Loan to Value and might qualify for a lower rate from another lender.
Brendan