Your income is €40,000 gross, but you are paying almost €12,000 a year in mortgage repayments?
Are you in the Mortgage Arrears Resolution Process - MARP?
AIB is the only lender which is writing down debt, but it's very rare. They may well give you a split mortgage as you seem to be making great efforts to pay it.
As your father in law is a joint borrower, they will assess his income as well, and may decide that between the three of you, you do not need a restructure.
Are you trading down for financial reasons or for other reasons?
At the moment, your negative equity will evaporate if house prices rise by 50%. If you trade down to a house which costs €100k, you will need house prices to rise by 100%.
Will you not be farther from work? Have you factored in the cost of and time spent commuting?