herald

Tuesday 12 December 2017

Lifeline for families caught in negative equity nightmares

AID: Loans will transfer debt on to new home

HOMEOWNERS who are trapped in a negative equity nightmare now have a new option to help them move on.

Individuals and families who are living in a property worth significantly less than what they paid for it have been thrown a lifeline.

Two of the country's major lenders have created a type of home loan that will transfer their negative-equity debt on to a mortgage of a new property.

It is hoped that it could particularly assist families who want to move to a bigger home.

Mum-to-be Marissa Carter said that she and her husband who live in a one-bedroom Dublin apartment would jump at the chance to trade up.

"If it means we can move on we would do it," she said.

"It will be a very long time before the apartment is worth anything like what we paid for it."

The couple moved into their Carrickmines apartment in 2009, paying top notch for the posh pad, but right now they feel trapped.

"It's very difficult now that we're starting a family," she said. "A one-bedroom apartment is not ideal with a baby on the way."

Permanent TSB and Bank of Ireland have been given the go-ahead from the Central Bank for the restyled loan.

Homeowners who want to buy a new place would be paying an additional 25pc more than the new property is worth.

So if someone purchased a home for €300,000, they would carry €75,000 of negative equity on to the new mortgage.

The product is due to be closely regulated and the Central Bank hasn't given the green light for a widespread distribution of these products among other mortgage lenders.

But crucially the scheme is going to be limited to those who are able to meet the repayments.

These specialised mortgages will only be available to existing customers of the two banks.

And there will be limits placed on how much negative equity can be carried over.

The representative group for distressed mortgage holders, New Beginnings, said the scheme does very little to support individuals in serious debt.

And spokesman David Hall said that there were some positives to take from the move but overall the major issues have not been addressed.

"Any proposal that helps the crisis is very welcome but it needs to be focused on a significant number of people," he said.

"I think it's an attempt by two of the mortgage lenders with the some of the highest rates to try to kick start the property market."

clairemurphy@herald.ie

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