Struggling with mortgage debt can be very stressful and it can be hard to know where to start. If you fall behind on payments and do nothing, your mortgage lender will take action to recover the overdue payments.
Talk to your lender about ways to pay your arrears
Contact your lender and explain your financial situation. Let them know you can’t keep on top of your repayments and ask how to make repayments more manageable. Your lender must work with you to get you back on track with your mortgage. Your lender will:
- Get information from you on your financial situation (using a Standard Financial Statement SFS (pdf) which asks for details of income, expenditure, debts and assets)
- Use this information to assess what option might be suitable
- Resolve your case by offering a restructuring arrangement – also called an alternative repayment arrangement (ARA)
- Tell you if they cannot agree an alternative arrangement with you and explain your options
Making sense of alternative repayment arrangements
The table below explains some of the different alternative repayment arrangements (ARAs) but there are many different variations. An ARA is when you and your bank agree on a way to restructure your mortgage so that you can continue to pay it off in the long term.
Every case is different, and your lender must look carefully at your personal circumstances before deciding what option to offer you.
You can find out which options your lender offers on their website. Think carefully about the offer and whether it is sustainable in the long term.
Short-term alternative repayment arrangements (ARA)
|Short-term ARA||What is it|
|Payment break||You defer (delay) paying all or part of your mortgage for an agreed time.|
|Interest-only||You only pay the interest on your mortgage for an agreed time.|
|Deferred interest||You defer (delay) paying an element of the interest on your mortgage for an agreed time.|
|Interest reduction||Interest is reduced for a short time or permanently|
|Reduce payment||You pay less than the full amount for an agreed period.|
Things to consider for these short-term ARAs
These are only suitable if you think that you will be able to return to meeting your full capital and interest repayments in the near future.
When the agreement ends, your lender will recalculate your mortgage repayments based on the remaining term and the outstanding mortgage balance. This means that your repayments will increase, as you now have a shorter term to pay back the outstanding mortgage balance.
|Long-term ARA||Things to consider|
|Capitalisation of arrears |
The arrears (and interest) are added to the outstanding mortgage balance and spread over the remaining term of your mortgage.
|This may increase your monthly payments. Can be combined with a term extension so that your monthly payments are less|
|Term extension |
You pay your mortgage over a longer period which means you pay less each month
|Your cost of credit will increase, as it will take you longer to clear your mortgage in full. The cost of credit is the difference between the amount that you borrow and the total amount that you will repay by the end of the mortgage, including interest. You need to factor in what age you will be when the mortgage expires (will you be retired?).|
|Split mortgage |
Your mortgage is split into two parts to reduce your monthly repayments. You make agreed repayments on The first part of the mortgage and the second part is set aside (or ‘warehoused’) to be paid at a later date.
|Find out what happens with the outstanding mortgage balance when the loan reaches maturity (when the loan is expected to be paid in full). Some lenders may write off part of the warehoused loan, some add interest to the warehoused part of the mortgage and others don’t.|
Important note on tracker mortgages: Your lender cannot ask you to change from an existing tracker mortgage to another mortgage type as part of any alternative repayment arrangement except in limited circumstances. These circumstances are set out in Provision 46 of the Code of Conduct on Mortgage Arrears.
Remember to co-operate with your lender as far as possible to avoid being removed from the mortgage arrears resolution process (MARP) and losing those protections.
Find out more from the CCPC:
- Work out monthly repayments on mortgage options using the CCPC’s mortgage calculator
- Get more general information on mortgages from CCPC
What happens if you can’t agree an alternative repayment arrangement with your lender
If your lender does not offer you an alternative repayment arrangement, they must explain the reasons why.
Your lender may write to you to tell you that your mortgage is “unsustainable” and is now outside the MARP process. This means they can take you to court to repossess your home.
It’s still not too late to try to reach an agreement. Your lender must explain what options are available. It may ask you to consider one of the following:
You sell your property and buy a cheaper one. The size of your mortgage and monthly repayments are reduced. It may be possible to add the difference between the sale price and what remains owed on the mortgage (negative equity) to the loan and secure it on the new property.
Mortgage to Rent
You could qualify for a Government scheme where you transfer the ownership of your home to an approved housing body. You then pay rent as a social tenant. If you take up the mortgage-to-rent option, you will no longer own your home.
You agree for your lender to take ownership of the property and you remain responsible for any amounts that you owe which are not covered from the sale of the property.
You sell your property and repay your mortgage with the money from the sale. Where there’s a shortfall, you will remain responsible for that amount.
Making an appeal on a decision
You can appeal the decision to the lender’s internal appeals board. This board must have a written appeals procedure. You can also appeal if you do not agree with the ARA offered or if the lender has classed you as not cooperating. You must be given a reasonable amount of time to appeal. This must be at least 20 business days from the date of notification of the decision. MABS can help you to figure out whether you have grounds for an appeal, and to put this appeal together.
If your lender rejects your appeal, you can make a complaint to the lender if you think:
- You have grounds for a complaint about how your case was treated under the Central Bank Code of Conduct on Mortgage Arrears (CCMA).
- The lender did not fully comply with the requirements of the CCMA.
Making a complaint
If your complaint is not dealt with to your satisfaction, you can make a further complaint to the Financial Services and Pensions Ombudsman (FSPO). You can only complain if you think:
- You have been unfairly treated by the lender during the assessment and appeal process.
- Your lender has not correctly applied the CCMA to your case.
Find out more:
- You may be able to get free support under Abhaile – find out if you qualify.
What happens if your lender has started court action
Being faced with the possibility of your lender taking you to court to repossess your home can be a very stressful experience. However, there is help available.
Remember: It’s not too late to try and come to an agreement with your lender, even if court action has already started.
If your lender had started court action for repossession of your house, you should take legal advice as soon as possible. If you cannot afford private legal advice, you should contact the Free Legal Advice Centres (FLAC) on 1890 350 250 or visit flac.ie.
MABS cannot give you legal advice, but there are a range of other specialist supports you can get if you are in serious mortgage arrears – see ‘Get more help from MABS’ below.
Find out more:
- Read our advice about what if a lender takes you to court?
Get more help from MABS
This can be an extremely stressful time, but help is available. Our professional advisers can help you to put shape on the problem and to put together a money management and tackling debt plan.
You can get general money management advice. MABS can help by supporting you to:
- Draw up a money management plan
- Check you’ve applied for all the benefits and entitlements you’re due
- Make a payment plan
- Manage a change in circumstances
You can get debt advice. MABS can help by:
- Working through the steps of the MARP with you
- Negotiating with your mortgage lender and other creditors if required
- Helping you set up a payment system once an agreement is reached with your lender
You can get specialist mortgage support under the Abhaile. Abhaile is a state-sponsored scheme set up to help people with serious mortgage arrears to access advice.