Do you get confused when you see a letter with lots of acronyms and no idea what they mean? You’ve most likely seen the headlines about mortgage sustainability and affordability but don’t quite know where the numbers come from? We’re here to help break down the myths and common terms you may come across. This time, we’re talking about Reasonable Living Expenses or their acronym – RLEs.
What are Reasonable Living Expenses?
Reasonable Living Expenses (RLEs) are guidelines to help ensure that a borrower in mortgage arrears maintains a reasonable standard of living while they try to resolve their debt problems.
RLEs cover the borrower’s day-to-day expenses, which are necessary to have a reasonable standard of living. The Insolvency Service of Ireland (ISI) monitor and update the RLE guidelines on an annual basis (required by the Personal Insolvency Act 2012). The ISI considers that, for the purposes of the Act, “a reasonable standard of living is one which meets a person’s physical, psychological and social needs.”
These guidelines cover expenses such as food, clothing, health, household goods and services, communications, socialising, education, transport, household energy, childcare, insurance and allowances for savings and contingencies.
Why are Reasonable Living Expenses used?
RLEs are designed to help protect borrowers by ensuring that a borrower has enough money each month to cover expenses, without overstretching themselves. This commitment to having essential expenses covered can have a huge impact on borrower’s physical and mental well-being. RLEs can help a Personal Insolvency Practitioner (PIP) determine what the best possible arrangement is for a borrower in home mortgage arrears.
It lets the PIP know what spare income is left over at the end of each month to pay back the borrower’s creditors. This benefits the borrower as they are paying into an arrangement at a rate that matches their means. Borrowers in mortgage arrears can access the services of a PIP for free through the Abhaile scheme, by way of a voucher.
You can find the list of Abhaile PIPs
How are Reasonable Living Expenses determined?
- Household Composition– number of adults and children (if any) living in the house.
- Need for a Car - does the household require a car and is the quality and accessibility of public transport good.
- Other Costs – mortgage costs and if applicable, childcare costs.
- Special Circumstances – medicine/health costs associated with a physical or mental condition and college-going children, if applicable.
What is considered Reasonable Living Expenses?
The table below is taken from the ISI and displays the monthly set costs considered to be Reasonable Living Expenses. Note in relation to children’s costs – some additions are applied if your family has more than two children. Approximately €10 extra each for the third and fourth child.
You can read the RLE guidelines in full.
It is important to note that these are guidelines. A borrower is not required to spend their money as listed in the breakdowns; they have total control over their spending.
Let’s take a look at some RLE real-life examples…
Example 1 – Brian and Elaine are a couple with three young children (1 pre-school, 2 primary school).
- Their monthly mortgage repayments are €1,200.
- They have one car and require it.
- Monthly childcare costs are €800.
- They have a monthly special circumstances cost of €100.
This household’s RLE would be €3,982.15*.
Example 2 – Eamon is a single man with no children.
- His monthly mortgage repayments are €700.
- He does not require a car, meaning he can use public transport.
- His monthly special circumstances are €150.
This household’s RLE would be €1,788.14*.
Example 3 – Donna is a single parent with one child in secondary school.
- Her monthly mortgage repayments are €900, and she is responsible for all of this.
- She has a car and requires it.
- She does not have any childcare or special circumstances costs.
This household’s RLE would be €2,406.06*.
These figures have been calculated using the RLE Calculator on the ISI website. They act as an approximate guide. A PIP will go through your information in more detail to figure out your specific RLEs and help you determine your best course of action. It is important to note that some flexibility is allowed to recognise and provide for the differing needs of persons, in relation to mental and physical health.
If you would like more information on RLEs and mortgage arrears supports available through Abhaile, call the MABS Helpline on 0818 07 2000 to speak with a Dedicated Adviser or message us on WhatsApp 086 035 3141.