# 19 Buy to let mortgages with AIB - unfair restructuring offer



## homes (31 Jan 2014)

Dear Brendan and all 

I would really appreciate  what you think of what AIB offered me when I went back to restructure Morgages 

I feel they are treating me very unfairly 

I am 40 years old and full time landlord own 19 houses all with AIB 18 AIB mortgages = 12 houses on tracker and 7 on buy to let rates I have never defaulted no arrears no late payments and the 7  buy to let have only 10 years remaining on their mortgages I also have all house insurances savings all with AIB Bank 

I went back to AIB to have the mortgages restructured because the rents have fallen and I am using savings to keep up with the repayments My request was for AIB to push out all the years 

The only thing  AIB offered me was one year interest only but for that they want two properties put on the market immediately and all cross securitised and on the sale of any of them the AIB would recieve the full proceeds of sale and use same to reduce the total debt 

I lost my tracker rate on the 7 that are now buy to let rate when I extented interest only but was never told I would not get tracker rate  back 

None of the houses are connected they are all principal sumed 

Await your replies


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## Brendan Burgess (31 Jan 2014)

There is no reason at all for AIB to restructure mortgages which are on cheap trackers. These are loss-making so it's in their interests to encourage you off them. 

The fact that the rent has gone down is not really that relevant. 

Your priority must be to protect your cheap trackers.  

While the one year interest only deal seems very generous of them, I would be concerned that they would set the proceeds of the 2 house sales against the cheap trackers and not the SVR mortgages. 

You need to get control of your finances back. You should sell some of the properties - presumably those on SVR and use the proceeds to keep up your repayments on the cheap trackers. (There may be other factors such as tax relief on the interest, CGT exposure etc.) 



> savings all with AIB Bank


If you have savings with AIB, you should be running them down so that you don't need rescheduling. 



> I also have all house insurances ...all with AIB Bank


You should be shopping around. 



> I lost my tracker rate on the 7 that are now buy to let rate when I  extented interest only but was never told I would not get tracker rate   back


This was very careless of you.  As a professional landlord you should have been alert to the fact that you might lose the tracker rates. However, go back over the documentation. If it's not clear that you were switching to a SVR, then you may have grounds for complaint. 



> None of the houses are connected they are all principal sumed



All of the houses *are *connected, in that they and the mortgages are in your name. If you sell a house for less than the mortgage amount, you still owe the shortfall and with plenty of other assets, AIB will go after you for it.

I don't know what "principal sumed" means 


Brendan


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## 44brendan (31 Jan 2014)

Please note that AIB as with all banks are required to have a policy on BTL mortgages. This Policy is known as a MARS Policy and normally would not require you to place any property on the market provided that you can pay at least 5% of the total debt on a regular (monthly) schedule. Your post indicates that you have this ability. Rermember this is a minimum affordable amount and if a bank assessment of your circumstances indicates that you have an ability to pay a higher amount, then they are entitled to insist on the higher repayments being maintained. Contact the Bank and request a copy of their MARS policy.


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## 44brendan (31 Jan 2014)

Also just to advise you that the Bank can increase the interest margin in return for a renegotiation of loan repayments.


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## Brendan Burgess (31 Jan 2014)

Sorry, I had to post that last post before I had finished. 



> the 7  buy to let have only 10 years remaining on their mortgages



If there is only 10 years left, then they should be in good positive equity and you should consider selling them.  






> they want two properties put on the market immediately and all cross  securitised and on the sale of any of them the AIB would recieve the  full proceeds of sale and use same to reduce the total debt



This is not an acceptable offer .

If you cross secure properties, you may find AIB being difficult when it comes to selling them. They may refuse  permission or just mess you around. 

As I have already said, it's probably good financial planning on your part to sell at least two houses, but you should decide which two to sell. 

Brendan


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## homes (31 Jan 2014)

Thanks 44 Brendan 

for telling me about Mars policy . I would be prepared to pay more than the 5% as I think I can efford . I agree to except what I can pay its just to get back to that point I would like to hold out for another while as I have put money into these houses to which today to sell I will not get back if given a chance I would hope a price increase . The Market appears to be improving both in rental and sales


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## dereko1969 (31 Jan 2014)

homes said:


> Dear Brendan and all
> 
> I would really appreciate what you think of what AIB offered me when I went back to restructure Morgages
> 
> ...


 
Sorry but where are the properties? You state here that rents have fallen yet in your later posts you state they are rising, which is it?

Check your documentation on the interest only extension, you would have been made aware (or it would at least have been included in the documentation) that the trackers would not be offered again if that was the case.


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## 44brendan (31 Jan 2014)

This whole focus on selling properties as being a first resort when a mortgagee of BTL units has a repayment problem is both unrealistic and in certain cases unreasonable. A bank must explore all reasonable options put forward by a client and help to achieve a result that will protect both its own position and that of the client. In my own experience I have come across a large number of cases where a client has BTL finance on a relatively short remaining loan term. The 5% sustainability test is there to allow the client some level of flexibility in agreeing a compromise solution with the Bank. I.e. If the client has the capacity to meet a 5% repayment then there is scope to restructure the loan facility. This can facilitate an allowance for some recovery in the market in the medium term, when sale can either clear the associated loan or reduce the residual amount of negative equity. In some cases it can allow time for the client to increase his repayment ability and restructure the loan(s) over a longer term.


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## Gerard123 (31 Jan 2014)

Hi.  Rather than speculating back and forward in what is clearly a critical matter for you my advice is rather simple though comes at a cost.  You need to engage with a professional financial advisor immediately.  I do not wish to be flippant or judging (apologies if it sounds like it), however I cannot believe that as a professional investor, given your facts above, you allowed the matter to get to where it is.  You have 19 properties, many owned for a considerable period, there is no reason for you to be in such a position.  If you do not have a strong financial advisor already, which I doubt, please go and get one.  You need immediate financial advice or you risk losing significantly over time and threatening your entire portfolio.


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## homes (31 Jan 2014)

Thanks Gerard123 for getting back  I really appreciate your advice


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## homes (31 Jan 2014)

44Brendan , I phoned my bank aout MARS they say MARS is only for three properties anymore than that goes to FSG at bank to make the decision . What do you think of that ?


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## Commercial (1 Feb 2014)

Homes, is the rental income your main source of income?

MARS applies to 3 investment properties, any more investment properties than this and you are deemed a professional investor. If you can't repay the existing loans per the original agreements you are at their mercy to some extent. 
However, you need an income to live off. If that only comes from the houses you may have an argument


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## homes (1 Feb 2014)

Commercial ,  Its my only income


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## homes (1 Feb 2014)

Brendan

I did say to the bank I was prepared to take a 1% increase on tracker rate if they pushed out the years


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## Joe_90 (1 Feb 2014)

Surely its very had to advise without having some info on the values, o/s loans, repayments, amounts of rents and tax position.

If your average rent is €800 pm then you could have a rent roll of €182,400, 75% of tracker interest amounts to what? do you have any Case V Capital Allowances to shield rent.

If property management is you full time job are you in a position to offer services to other owners or to Management Companies to generate some income in your own right.


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## Brendan Burgess (1 Feb 2014)

Joe_90 said:


> Surely its very had to advise without having some info on the values, o/s loans, repayments, amounts of rents and tax position.



The initial question was "Is AIB being unfair?" and I think it's fairly easy to answer this. They are not. 

After that we can set out some general principles



> Your priority must be to protect your cheap trackers.
> 
> While the one year interest only deal seems very generous of them, I  would be concerned that they would set the proceeds of the 2 house sales  against the cheap trackers and not the SVR mortgages.
> 
> You need to get control of your finances back. You should sell some of  the properties - presumably those on SVR and use the proceeds to keep up  your repayments on the cheap trackers. (There may be other factors such  as tax relief on the interest, CGT exposure etc.)


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## facetious (2 Feb 2014)

I didn't realize that you could have a tracker mortgage with a buy to let property.


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## Knuttell (2 Feb 2014)

With 19 properties I am surprised your accountant never advised purchasing sec 23 property?
Would you consider selling off a poor performer and buying a sec 23 property with the released cash?This would certainly reduce you tax bill and give some breathing room.


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## Brendan Burgess (2 Feb 2014)

The key here is to sell a property and release cash as a reserve to keep up the repayments on the cheap trackers.

Tying up the cash in another property is not a good idea. 

Brendan


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## mercman (2 Feb 2014)

Interesting thread. I'm unable to understand how the OP states his rents are going down, but elsewhere in the main rents are rising.


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## homes (2 Feb 2014)

sorry if misunderstood me My rent reduced by approx 50% and now that they are beginning to rise I would like not to be forced to sell yet I have struggled to keep all going and feel I am paying and need a chance


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## Brendan Burgess (2 Feb 2014)

Hi homes

You are being forced to sell if you can't meet the scheduled capital and interest payments. 

Your best plan is to regain control by selling the ones which suit you best and not being under the control of AIB.

Forget about the unfairness of it all.  Focus on solving this particular problem. 

Brendan


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## Bronte (3 Feb 2014)

homes said:


> My rent reduced by approx 50% and now that they are beginning to rise I would like not to be forced to sell yet I have struggled to keep all going and feel I am paying and need a chance


 
Where on earth did rents reduce by 50%?

Any chance of some actual figures. It's quite clear AIB are doing nothing wrong, and are most certainly not being unfair. 

Whatever you do don't let them take control by going cross securitised. Then you'll be well and truly at their mercy. 

You state that you are struggling and that you feel you are paying, but if you were paying as per your loan agreements you wouldn't need to have to deal with AIB, in any case you can take back control. So I agree with the advice to sell one or more of those with equity. Not sure in the absence of figures whether this cash should then be used for repayments or to pay down some mortgage. 

The 12 on trackers are presumably capital and interest?  And the 7 investor mortgages rates are interest only?

Knuttell, isn't section 23 basically phased out? But I have seen some properties on Daft advertised with it.


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## Brendan Burgess (3 Feb 2014)

Bronte said:


> Not sure in the absence of figures whether this cash should then be used for repayments or to pay down some mortgage.
> 
> .



If the rental income from the remaining properties is not covering the repayments comfortably, then he should keep the cash to make sure that he can maintain the repayments on the tracker 

I have seen people paying down capital on an SVR and later getting into trouble on a tracker buy to let.  

Anyone with a tracker buy to let has to plan their finances very carefully to make sure that they have enough money to meet their repayments.


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## 44brendan (3 Feb 2014)

Unfortunately, like it or not, AIB is calling the shots here. RI is your only income and it would appear that all of your properties are pledged to AIB. You are going to have to negotiate with them as they are fully entitled to take all of the ent RI from the properties to meet the loan repayments. The mortgage documentation is likely to contain the power to appoint a fixed asset receiver over the properties if you don't meet the P&I repayments. Co-operation in selling some of the units is something that you will  now need to consider. However, negotiate with the Bank. i.e. You will need to be prepared to be somewhat flexible in order to get some level of flexibility in return.


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## homes (3 Feb 2014)

Hi bronte

I'm paying full capital and interest on all loans and using savings to meet shortfall where rents fell


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## Brendan Burgess (3 Feb 2014)

homes said:


> Hi bronte
> 
> I'm paying full capital and interest on all loans and using savings to meet shortfall where rents fell



You really need to take professional advice on this.

You have lost three cheap trackers through restructuring while you had savings????? 

Brendan


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## homes (3 Feb 2014)

44Brendan , 

All my mortgages are pdh this was on all the packs  ,,,,,,,,,,


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## homes (3 Feb 2014)

Brendan 

The reason I think the bank is treating me unfairly is that unless I allow the cross securitisation of the property they are offering NOTHING AT ALL 

Thanks


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## Brendan Burgess (3 Feb 2014)

Why should they offer you ANYTHING AT ALL?


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## robert 200 (4 Feb 2014)

Rents in Dublin decreased by about 35% in the 2007 - 2008 period . They have recovered about 20% now . Still some way to go .


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## Bronte (4 Feb 2014)

robert 200 said:


> Rents in Dublin decreased by about 35% in the 2007 - 2008 period . They have recovered about 20% now . Still some way to go .


 
Well I don't understand a 35% drop in Dublin, it really fluctuates up there.  In any case even if it's true you mention it was only for a one to two year period.  Presumably before that rents were really high.  Where are you getting the 35% from. 

But there is another side to this fluctuation, what you're losing in rent you're gaining in capital appreciation unlike most of the rest of the country.  

Still though Homes said a 50% drop.  Where on earth could that be.  Waterford maybe, it has a glut of apartments that are impossible to sell and going for half nothing.


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## Bronte (4 Feb 2014)

homes said:


> Hi bronte
> 
> I'm paying full capital and interest on all loans and using savings to meet shortfall where rents fell


 
It's really hard Homes to give you proper advice when you only come back with selective bits of information.  

You mention in the first post interest only, so it's impossible to understand what is going on with all your mortgages.  You've been asked to list them and their mortgages, how on earth otherwise do you expect to get meaningful advice.  You've blandly stated AIB are in the wrong, but nothing has been advanced by you to support this.  

You've stated on another post that being a landlord is your profession.  So where did the savings come from that you are now paying down mortgages with.  If you are not careful I can see that AIB will have total control over your portfolio.  You've already lost fantastic trackers.  

If you're afraid of being identified you just cuggle muggle the figures a bit.  And I would really like to know where rents have dropped 50%.  I'm not in the Dublin market but I'm amazed a professional has had a 50% drop in all their rentals.  I operate in a small way and I've never had anthing like a 50% drop, max 10%.  Pre, during and after celtic tiger.


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