Our Advice

Mortgage Arrears

Short Term Arrangements

12th July 2017 @ 12:01 PM by Rosylnn Doherty

In this week's article we discuss the advantages and disadvantages of short term arrangements that some lenders may be agreeable to after we negotiate with them on your behalf.

Interest only Restructure

You only pay the interest on your mortgage for a period of up to 12 months.

  • Advantage: Temporarily reduces your overall mortgage repayments for the period of the arrangement.
  • Disadvantage: As you have not made any capital repayments during the term of the arrangement your monthly repayments on the remaining term of the mortgage will increase.

Interest and part capital

You only pay the interest on your mortgage and part capital for a period of up to 12 months.

  • Advantage: Temporarily reduces your overall mortgage repayments for the period of the arrangement.
  • Disadvantage: As you have made reduced capital repayments during the term of the arrangement your monthly repayments on the remaining term of the mortgage will increase.

Temporary, partial or full moratorium

You defer paying all your capital and all or part of your interest mortgage repayments for a specified period of time.

  • Advantage: Allows you time to stabilise your financial position.
  • Disadvantage: As you have not paid all or part of your interest and all capital repayments during the term of the moratorium your monthly repayments on the remaining term of the mortgage will increase, once the temporary, partial or full moratorium expires.

Important things to consider on short term arrangements

During the period of the short-term repayment arrangement it is critical that you take the necessary steps to prioritise your mortgage repayments above all other debt to ensure that you are in a position to return to full capital and interest repayments on your mortgage. This may also include an adjustment on your monthly household expenditure. You may also need to renegotiate repayments on other debt such as an overdraft, credit card, or credit union loan. When any of the short-term repayment arrangements expire, KBC will re-calculate your repayments based on the outstanding capital balance and the unexpired term. If the term of the mortgage is not extended at this time, your mortgage repayments will be higher over the remaining term as the capital balance outstanding reduces at a slower pace than was originally agreed for your mortgage. The slower pace of capital paydown will increase the cost.

Some Recent Restrucutres

Check below for some of our most recent restructures for clients.

The examples of Restructures given on our Website are indicative of some of the resolutions being offered by our clients’ lenders. Each file is assessed on a case-by-case basis some of the given examples may not apply in your current situation

WARNING: YOU MAY STILL HAVE DEBT OUTSTANDING AFTER COMPLETING THE DEBT MANAGEMENT PROCESS

Image of a family

"Our clients owed an overall amount of €220,000 with arrears of €68,426 on their family home. Having restructured their account, their lender has warehoused €84,500 and customer is making repayments on €135,500. Their lender will reduce the warehoused amount by 5% for every 5 years that the customer stays in the arrangement and will potentially be reduced by approximately €29,575 at the end of the mortgage term."

PM, Louth - November 2016
SPLIT MORTGAGE RESTRUCTURE AND LUMP SUM WAREHOUSED
Image of a female client

"Our client owed an overall amount of €175,000 on their family home. Having restructured their account, their lender has warehoused €73,000 and customer is making repayments on €102,000. Their lender will reduce the warehoused amount by 5% for every 5 years that the customer stays in the arrangement and will potentially be reduced by about €22,000 at the end of the mortgage term."

GB, Drogheda - October 2016
SPLIT MORTGAGE RESTRUCTURE AND LUMP SUM WAREHOUSED
Image of a male client

"Our client came to us with only a small level of Arrears of €5k but his bank had been threatening Legal Proceedings. Today, we had what we feel, was a breakthrough with the notoriously difficult to deal with, PEPPER MORTGAGES/SHORELINE. They were seeking a monthly repayment of €768 and agreed today to accept a more affordable €540 per month.

NC, Louth - May 2017
SPLIT MORTGAGE RESTRUCTURE AND LUMP SUM WAREHOUSED
Image of a family

"Our client came to us having not paid her mortgage in almost six years. Due to a change in circumstances, she is now in a position to start making repayments and following the submission of her SFS by The Financial Foundation to her lender, they have accepted her offer, capitalising her arrears and she can move forward with a monthly repayment that is working out less than paying rent!"

TM, Louth - January 2017
6 YEARS OF NON-PAYMENT OF MORTGAGE & RESTRUCTURE OFFERED
Image of a male client

"Our clients came to us with Arrears of €65k and facing constant court adjournments. Before the account was restructured, the bank was looking for a monthly payment of €1377 per month. Following an interest rate reduction and term extension, this family of 6 are now safe in their home with a monthly repayment of €652. We're also expecting this case to be struck off by the courts."

DM, Louth - November 2016
MORTGAGE RESTRUCTURE & REPOSSESSION PROCEEDINGS CEASED FOR FAMILY OF 6
Image of a male client

"Our client came to us as he was €21k in arrears and facing repossession of his home. The bank was seeking a payment of €610 per month which our client could not afford. Mortgage has now been restructured to a monthly repayment of €395 and his case is to be struck off with no more pending court dates."

AMcC, Louth - October 2016
MORTGAGE RESTRUCTURE