AIB and EBS launch product for those in negative equity seeking to trade up

AIB and subsidiary EBS have launched a negative equity trade-up mortgage that will allow customers in negative equity to trade up to a larger property and take their debt with them.

The companies said the product was being rolled out in response to customer demand. Increasingly, people find the properties they bought in the boom no longer meet their needs.

Owen Purcell, head of mortgages at EBS, said: “Many customers who bought their homes in the boom years are now in negative equity. A proportion of these customers find they are in a position where they require a bigger home and can afford to service a larger loan. The product we are launching today is designed to meet the needs of this group of customers, enabling them to sell their current home and purchase a new property that is more appropriate for their current needs.”

The product will allow customers trapped in negative equity to sell their home and transfer the debt from their previous mortgage to a loan for a property of greater value. The banks will assess the customer’s ability to repay a mortgage that will combine the negative equity of the previous home as well as the mortgage on the new home.

Customers who want to avail of this product from either EBS or AIB will have to demonstrate they can an afford the new, larger mortgage and that they are not experiencing financial difficulty.

The product is aimed at customers who have a growing family and now need a larger home, or customers who want to relocate for either personal or professional reasons.

Trevor Grant of Mortgage Negotiators said any attempt to help those in negative equity is to be welcomed, but that this product would help very few mortgage holders.

“Very few customers will be able to demonstrate sufficient net disposable income to qualify for the mortgage,” he said. ” This is exemplified by the take up of Bank of Ireland’s similar product — which as we understand it has merely been a handful — launched earlier in the year.

“Like many of the new launched ’innovative products’, it looks good on paper, is unworkable in practice, therefore no real impact.”

The product will be available through EBS offices. AIB customers can apply through their local AIB.