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Sell your house, bring the negative equity with you - is the new AIB mortgage plan a good one?

The bank has launched a new product that will help people in negative equity move – but they’ll take the debt with them.

Image: Mark Stedman/Photocall Ireland

AIB CUSTOMERS WILL be able to sell a house that is in negative equity and bring and unpaid debt with them to a new home under a scheme announced by the bank today.

The product is designed to enable people in negative equity to move up the property ladder without leaving the bank out of pocket.

Personal finance expert Bob Quinn of themoneyadvisors.ie, welcomed the new scheme, saying it would help those stuck in starter homes that will never be worth what they paid for them.

“A lot of people in their mid-30s, they’re already on the property ladder and are moving into the family home arena, but found themselves stuck with the properties they bought in the boom.”

This will give them a chance to offload the bachelor or bachelorette pad, while bringing the negative equity with you.

The offer is open only to customers of Haven, EBS or AIB who are already on tracker mortgages, and entails an additional 1% markup on the mortgage rate.

Head of mortgage business development at AIB Michael Quirke said that mortgage drawdowns at AIB were up 50% year on year.

“These enhancements to our mortgage offerings further underline our commitment to supporting the residential property market and our customers who are considering moving home.”

Quinn said that while the offer is welcome, he cautioned that it is not available to all mortgage holders, particularly customers of different banks. He said that reforms and strategies to deal with the debt hangover from the boom need to be introduced across the market.

“Until there’s some sort of co-operation, it’s going to be limited in terms of effectiveness.”

He said that the scheme would, in principal, go some way towards alleviating problems such as a lack of home-owner mobility and supply constraints affecting the housing market.

Read: The verdict on Bank of Ireland’s €250 million mortgage book sale>

Read: Buy-to-let mortgages have been “left to fester”>

About the author:

Jack Horgan-Jones

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