Key Post Lenders' criteria for people who want to switch from vulture funds

Brendan Burgess

Brendan Burgess

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Raging Bull attached this to another post in the middle of a long thread. I thought it worth highlighting.



The Mortgage Store’s ‘Fresh Start’ outlines the criteria for lending to customers who have experienced financial difficulty in the past (both BOI and non BOI customers) provided they engaged / co-operated with their lender during their financially difficult period and the circumstances that gave rise to the arrears have been resolved / improved. We are obliged (under Regulation) to ensure a customer can afford their mortgage debt and therefore all new lending is subject to standard affordability assessment, including Switchers. These customer must demonstrate a satisfactory track record of repaying their existing mortgage repayments. For customers with previous financial difficulty and now meeting the payments and terms of their restructure loan, seeking to switch;

1. The new mortgage must be affordable on a fully amortising basis and be fully repaid by borrowers’ retirement age (typically 65 years ) – noting that some restructures include split mortgages whereby a tranche of the mortgage is at zero interest rate/ no repayments OR maybe the maturity term extended materially beyond retirement. These restructures are for customers that do not have affordability to repay their mortgage in full.
2. Satisfactory track record of meeting full capital and interest repayments that would fully repay the mortgage for a min period (typically 2 -3 years) to ensure sustainability of ability to manage debt level “

The granular details of our policy are set out below:

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Attachments

  • Bank of Ireland Fresh Start Criteria.pdf
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BPFI criteria

In early September, BPFI announced that lenders AIB, Bank of Ireland, Permanent TSB, Avant Money, Finance Ireland and ICS Mortgages agreed initial eligibility criteria to provide clear guidelines for home mortgage customers of Credit Servicing Firms seeking to switch their mortgage. The criteria, which are the same for all banks, are as follows:



· Customers must be repaying capital and interest on the full outstanding mortgage i.e. there is no split/warehoused element of the mortgage, and the mortgage is fully up to date

· The customers’ credit history, i.e. their Central Credit Register (CCR) record, must show a clean repayment track record without arrears for at least the past two years.

· Customers must be able to demonstrate that they have sustainable income which is adequate to repay the mortgage in full over the lifetime of the loan.

· Customers must have a satisfactory bank account performance i.e. no unpaid items such as a direct debit or standing order and all the customers’ other loans/debts must be up to date.

· The current Loan-to-value (LTV) of the mortgage must be less than 90%

· The circumstances that gave rise to any previous financial difficulty must have been resolved.


Once customers meet these initial criteria, applications will be assessed on a case-by-case basis in line with individual lender credit policy.
 
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The Central Bank claims that there are 10,000 accounts who meet the criteria:
  • variable rate mortgage - i.e. non tracker
  • Have never been in arrears, or
  • Have been in arrears but have not been in arrears for the last two years and are paying full capital and interest.
 
Brendan Burgess said:
So the Central Bank has told Pearse Doherty

As part of this package of measures, BPFI members listed in the recent announcement agreed and published initial eligibility criteria, to provide clear guidelines for home mortgage customers of NBNLs who are seeking to switch their mortgage

So these should be available for all banks.
Click to expand...
It's not a real answer to the question you had. The BPFI only covers '#3' on the BOI list, and as you've discovered is only the 'minimum' before they'll talk to a switcher.

I haven't seen anything as descriptive as BOI publicly available, but a mortgage broker should have indicative criteria for PTSB & Haven (which will be the same as AIB & EBS).

I'm assuming your focus is on switchers. For new lending, there is an additional layer with the 'fresh start', in that customers who previously went through insolvency are classed as first time buyers, and are eligible for the 'First Home Scheme' in which BOI, PTSB, AIB, EBS & Haven participate. Banks might be more open to lending where this applies as there is a state guarantee on a portion of the loan.


Brendan Burgess said:
The Central Bank claims that there are 10,000 accounts who meet the criteria
Click to expand...
Sounds quite plausible. It'd be interesting to break out the number who are with non banks simply because their lender left the market, but were never in arrears (Danske, BOSI, Irish Nationwide).
 
AIB Criteria from an email I received from AIB in September 2023.
And I know of someone who switched from a vulture fund with a split mortgage without having to serve out 2 years of full repayments.

People on a ‘split’ mortgage with their current provider can apply to switch to AIB and their application is assessed on a case by case basis. They are not precluded from applying and they do not have to sit out a certain ‘waiting period’. Similar to any new AIB mortgage the repayment schedule would be based on full capital and interest repayments.

A customer may opt to clear the ‘split’ element prior to switching or they may wish to switch their full outstanding mortgage. The Bank will assess both scenarios on a case by case basis and in line with our credit policy. For all such mortgage applications we look for evidence that the customer has the capacity to repay the full stress-tested mortgage over the remainder of its term.
 
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