Bank of Ireland’s new negative equity mortgages will allow customers to take out new home loans that are almost double the value of their house.
Up until now any negative equity mortgages offered to homeowners only allowed them to carry small amounts over to their new loan.
Following yesterday’s announcement that Bank of Ireland was now actively entering the negative equity market though, the bank has revealed that homeowners could end up with borrowings of up to 175% of what their new home is worth.
That means that someone who buys a €100,000 house could end up owing €175,000 on the negative equity mortgage on their new home.
Jonathan Byrne, the head of mortgages at Bank of Ireland, said that customers would have to undergo a full assessment by the bank and must demonstrate they can afford the new mortgage.
Up until now people in negative equity were offered new mortgages worth no more than 125% of the value of their new property.
There will be two type of mortgages offered – one for those who wish to trade up to a home of higher value and one for those who wish to trade down to a home of a lesser value.
Over 50% of Bank of Ireland’s residential mortgages are currently in negative equity.