New mortgage option for householders in negative equity

Bank of Ireland and Permanent TSB have been given the go-ahead to offer a new type of mortgage which would allow people to move house taking their negative equity debt with them, it has been reported.

The Central Bank has given the institutions permission to offer a new type of home loan which would see existing debt added onto a loan for a new property, according to the Irish Independent.

Up until now, the Central Bank was reluctant to give the go-ahead for this new type of loan fearing that it would drive people into deeper debt.

Strict limits will be imposed to make sure it is only offered to people who are able to make the repayments, the report added.

There will also be a cap imposed on the amount of negative equity that can be carried over.

Currently more than half of mortgage holders are in negative equity, meaning their property is worth less than their remaining mortgage.