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Mortgage deal gives in-debt families hope

FRESH hope for some struggling mortgage holders was revealed today with the announcement of a new Bank of Ireland offer.

New mortgages to allow customers in negative equity to move house are to be put in place.

The lender said it will reduce overall debt for some of its existing mortgage-holders and also bring fluidity back into the property market.

A significant numbers of homeowners in Ireland now live in a property worth less than what they paid for it and are unable to move.

"The majority of our customers are not in financial difficulty, but some of those who purchased homes, particularly in the last six or seven years, are currently in negative equity," Bank of Ireland said.

"Whilst this is only a problem for those who want or need to move, some customers may have experienced changes in their lifestyles such as getting married, having children or changing jobs, and now need to move home."


The mortgages will be offered in two forms -- one for those in negative equity who wish to move to a property of a higher value and one for those who wish to dispose of their current home and move to a property of lower value.

The Trade Up Negative Equity loan enables customers to sell their home and move to a higher-value property, carrying over an amount of negative equity to the new mortgage. The Trade Down Negative Equity will enable customers who do the same, but for those who want to move to a lower-value home.

Bank of Ireland said it may appeal to customers -- such as a couple who purchased a two-bed starter home in 2006, for €350,000 with a mortgage of €322,000 with a growing family --who may wish to move to a larger home worth €400,000.

If their existing home is now valued at €175,000, the balance on their mortgage is now €290,000 which is 166pc loan to value ratio (LTV).

Their new property costs €400,000, and 90pc LTV would equate to €360,000.

This new feature would allow this couple to borrow €475,000 or 119pc LTV.