# Split mortgages to be introduced



## angela59 (21 Jun 2012)

Today on the Irish Indepdendent:



Angela59


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## Brendan Burgess (21 Jun 2012)

We have to wait until the details are published, but as reported, if the normal rate of interest is charged on the split part, it will have the exact same effect as the Deferred Interest Scheme, 

Effectively, unpaid interest is deferred until the borrower can pay it. 

While the DIS was to last for up to 5 years, it seems that this will last longer.

The DIS has much more clarity. The borrower sees clearly how much they are being charged, how much they are paying, and by how much their outstanding mortgage is increasing through the deferral of interest. 

The downside of a split mortgage is that a borrower will be "repaying capital" on the active part while rolling up interest on the split part.  This makes no sense at all. 

The possible upside would be if they made the split part non-recourse. 

If the lender reduces the interest rate on the split part, then this would be far better for the borrower.  But they could achieve this by reducing the overall rate on the loan for those who are unemployed and not receiving MIS. 

Overall, it seems like a poor solution.


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## angela59 (21 Jun 2012)

Have to agree it does seem like a poor solution.


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## AlbacoreA (21 Jun 2012)

> But it can be revealed that the banks are planning to impose interest charges on the part of the mortgage that is being set aside, despite the objections of the Central Bank.



The Banks seem to want people to default rather than maintain their loans.


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## Kine (21 Jun 2012)

Frankly I don't see the massive appeal. Just another case of kicking the can down the road, burying the heads in the sand and hoping things will get better!


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## martindfs (21 Jun 2012)

the banks have recieved billions and what id like to know is 1-will they repay the billions back, 2-if so will they recieve a discount and 3-what are they really doing to assist the struggling mortgage holder!??


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## angela59 (21 Jun 2012)

Nothing by the looks of it, Split mortgages don't do anything for struggling mortgage holders if they are going to charge the same amount of interest on the part of the mortgage that is parked.


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## Brendan Burgess (22 Jun 2012)

Good article by Karl Deeter on the subject on myhome.ie 



> This idea is stupid, plain and simple, it is stacked in favour of the  lenders, that is why 7 of them have already signed up to it; a classic  ‘delay and pray’ manoeuvre and the only way it would make any sense to  use would be if interest were discounted or waived on the warehoused  portion, otherwise it makes better sense to just go bang and have a  personal insolvency agreement under the new legislation.
> 
> 
> Why go bang instead? Well, you get to start again with no claim on  future income the way this one does which could create potential losses  30 years away, if you have a home you simply can’t bear to leave then  that might sway it, but for your average borrower in trouble this is a  ‘solution’ but only for one side of the debt party.


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## DerKaiser (22 Jun 2012)

The idea is unnecessarily complicated.  In the indo example there is no mention of the fact that €1400 pm will pay off the mortgage in 25 years whilst €750pm will service the interest and ensure the capital owed does not actually increase.  

Talking about split mortgages where you pay €700 interest+capital on half the mortgage and €375pm interest only on the other half is a really awkward way of saying that you are meeting the interest costs but paying down the total mortgage outstanding at a slower rate.


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