Split mortgage customers at AIB won't suffer if they get windfall
AIB customers who get a split mortgage will not be forced to pay more even if they get an inheritance or win the lottery, it has emerged.
This is because the bank is unable to review the arrangement unless that is requested by the customer.
AIB explained that this is because the bank was entering a long-term contract with people given a split arrangement.
The state-owned bank denied it left itself exposed to losses because of this arrangement.
A split mortgage is where part of the money owed is put to one side and payments are made on an amount that the customer can afford.
A review of the arrangement can only be initiated by the customer and not the bank, a spokeswoman for AIB said. A copy of the split mortgage contract, seen by the Irish Independent, states: "Where your financial situation has improved or remained the same, the repayment structure will continue as detailed within this letter of agreement."
AIB reconfigured its split mortgage product earlier in the year. The bank, and its subsidiary EBS, is offering to write off set amounts of the warehoused portion of the mortgage if customers in arrears keep to the terms of the deal.
A family in negative equity that owes €300,000 could get up to €40,000 written off. If the family meets the revised payments, they can get another 5pc of the mortgage written off after five years. After another five years AIB will write off another 5pc, if the repayments are up to date.
The AIB spokeswoman said: "A review can be requested by the customer if they wish to reduce the warehoused part of the loan if, for example, they came into money. The bank wouldn't request a review – that would be up to the customer as the bank has entered into a long-term contract with the customer."
David Hall of the Irish Mortgage Holders Organisation (IMHO) said that it would be in the customer's interest to pay down the warehoused part of the loan.
"The bank offers incentives to pay down the warehoused part at a discount if the customer wishes," he said.
The IMHO has an arrangement with AIB to act as an intermediary between troubled mortgage holders and the bank, with funding provided by the bank for this service.