COVID-19: Mortgage Payment Supports FAQ
Mortgage Payment Break FAQ
Posted: 25th March 2020
The retail banks, non-bank mortgage lenders and credit servicing firms (so called “vulture funds”) have announced measures to help customers navigate these tough and unchartered times. These measures include postponing court proceedings for three months and the option of a payment break for up to three months. A payment break can offer a lifeline to those who need it; however, it is important to understand what it means for you and what happens to your loan when repayments resume.
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- What is a payment break?
- Why put a payment break in place?
- What type of payment breaks are available?
- What does a payment break look like?
- If I’m in mortgage arrears, can I get a payment break?
- I'm in a PIA or DSA and I need to access a payment break, what should I do?
- I'm in an alternative repayment arrangement (ARA) and I need to access a payment break. What should I do?
- I’m not in arrears, should I apply for a payment break?
- Will a payment break affect my credit rating?
- Are there any supports to help me deal with my lender?
- Are there other supports available for those already in mortgage arrears??
- How do I apply for a payment break?
It is a freeze on payments for up to three months, followed by ongoing reviews depending on the scale of your individual situation.
A payment break frees up your financial resources, meaning you can focus on essentials for your family such as food and utilities. This can help to remove some of the stress and anxiety you may be experiencing. If you are experiencing these feelings, the HSE have created a useful guide titled "Minding your mental health during the Coronavirus outbreak".
Moratorium Payment Break: This means full loan repayments stop for an agreed period. Once this moratorium period has finished, future loan repayments on the mortgage will increase. This happens because the loan must be repaid in its full during the agreed term.
Interest Only Payment: This means only interest is paid on the loan during the agreed period. Your monthly repayments will be less during this period, however, because you are not paying any capital (the amount you borrowed), your loan balance will not reduce during this period.
The Banking & Payments Federation Ireland (BPFI) has created this sample payment break to demonstrate how your mortgage repayments could change over time:
Note, this is only a sample. The effect of applying a payment break on your mortgage might be different, meaning that the cost could vary from the example above.
Each application is reviewed on a case by case basis but, lenders are committed to supporting all borrowers during COVID-19, even those already in financial distress. Contact your lender directly. If you can't speak with your lender, then contact MABS where a dedicated adviser will be able to assist.
You should contact your Personal Insolvency Pratitiioner (PIP) without delay if you think you will not be able to make your personal insolvency arrangement (PIA) or debt settlement arrangement (DSA) repayments.
I'm in an alternative repayment arrangement (ARA) and I need to access a payment break. What should I do?
If you have an alternative repayment arrangement (ARA) that you've negotiated on your own, then contact your lender directly. If the ARA was negotiated with the help of MABS, then contact your adviser. If you are unsure, then we advice that you contact an anviser from MABS.
You should only apply for a payment break if you are out of work and are likely to fall into mortgage arrears. If you can survive financially and can continue making repayments as normal, it is recommended you do so. This prevents the unnecessary build up of larger future repayments. If you are concerned about your future financial stability, then we recommend that you speak with an specialist adviser from MABS. Money advisers from MABS are expert at reviewing your financial situation and will provide independent, confidential and non-judgmental advice.
Lenders are working with the Central Bank of Ireland to develop measures so that the credit rating of those who have to apply for a payment break will not be adversely affected.
Yes – if you are unsure about your situation and next steps to take, it is always worth talking to someone about it. Contact your local MABS office to speak with an experienced adviser. If you struggle to engage with your lender, MABS can contact them on your behalf, taking some stress away from the situation.
Yes – borrowers can get free financial and legal advice through Abhaile. It is a Government funded scheme that provides support to people in long-term mortgage arrears. MABS is the gateway to Abhaile and working with the Insolvency Service of Ireland (ISI) and the Legal Aid Board (LAB), the scheme provides a wide range of help. To date, it has helped thousands of borrowers in mortgage arrears keep their home.
The following lenders have introduced online applications for borrowers seeking a payment break:
To request a payment break with following lenders and loan owners, you must contact them directly:
This FAQ blog does not represent legal advice and is intended for guidance only. If you are concerned about your current or future personal financial situation then please contact a money adviser from MABS. All face-to-face consultations are currently suspended, however advisers are available by phone and email. Contact details are available here.
Source: BPFI Press Release 25th March 2020 - COVID-19 Crisis - Banking and Payments Industry Support>. (opens in a separate window)
MABS is open and money advisers are available to take your money advice queries by phone and email.
You can contact your local MABS office or call the MABS Helpline on 0761 07 2000, Monday to Friday, from 9am to 8pm or you can check the MABS website for further updates and guidance.
For further information on Covid-19, please use these trusted information sources on COVID-19
- Latest updates on Coronavirus COVID-19 on Gov.ie
- Information on COVID-19 from the Health Protection Surveillance Centre
- Overview of COVID-19 on Citizensinformation.ie
Posted: 25th March 2020