Split mortgage query to pay more in warehoused loan or active loan

D

Dacook70

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Hi Brendan,

My split mortgage agreement with KBC was put in place in 2017. Recently my mortgge was transferred to BOI. 129K active and 157K warehoused. In the past 3years I managed to save a bit and I got 20K inheritance. All in all I have 50K at the moment. Now, I am thinking to approach Boi to renegotiate and see if I pay a lump sum of 50K to the warehoused and write off the rest? I know this seems impossible, but I would maybe wish some of the warehoused loan to be written off if I make a substantial payment to it Any advice you can give me is very much appreciated. Thanks.
 
Bank of Ireland will not write off the shortfall.

Why would they?

Why should they?

The best you can hope for is that they agree to set the cash against the active part of the mortgage.

However, it might be in your long term interest to pay down the warehouse and move the balance to the active part, so that your credit record starts to become clean again.

You should post all the figures
Amount in the active loan - interest rate
Amount in the warehouse
Amount of cash you have
Term remaining
Value of your home

Brendan
 
Thank you for your reply. Here's the figures
Active loan 129,338.00 as of January 2023 @ 4.25% interest
Warehoused 157K 0% interest
Term Remaining 17years (when I'm 70)
Value of property 375K that's as per valuation for property tax
I was just wondering would BoI have something like AIB where they write off a part when paying a lumpsum to the warehoused loan.
Many thanks for help in my query
 
No, the AIB situation is unique.

If you have €50k cash, I don't see it being worthwhile paying it off against a 0% loan when it could save you 4.25%.

You would be left with €107k in the warehouse. Moving this to the active fund would cost you €4,000 interest a year and even more in repayments.

So you should try to pay it off the active mortgage. It seems that the banks are allowing this rather than setting the cash payment against the warehouse.

However, the bank has a right to review your split arrangement. And they may well deem you able to increase your repayments and so move some of the loan from the warehouse to the active mortgage.

But it's probably worth trying anyway - assuming you have no other lending.

Brendan
 
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