Dealing with Mortgage Debt

Like many homeowners your financial situation may have changed in recent years. You may have fallen into arrears on your mortgage repayments, or you may be concerned about falling into arrears in the future. If so, your mortgage provider/servicer must follow the rules of the Central Bank’s Code of Conduct on Mortgage Arrears (CCMA). The CCMA provides you with certain protections and requires your mortgage provider/servicer to work with you with the aim of getting you back on track with your mortgage. You can get more information on the CCMA on the Central Bank’s website.

Whatever the cause of your financial problems, the most important things to do are:

Contact your mortgage provider/servicer as soon as possible – in this way your mortgage provider/servicer may be able to identify a possible solution for you. Don’t ignore the communications you receive from your mortgage provider/servicer – that’s the worst thing you can do.

Respond to communications from your mortgage provider/servicer. At all times your mortgage provider/servicer is willing to engage to see if a solution can be found for the problem you are having repaying your mortgage.

Look at your financial situation To help you do this, you will need to complete what is known as a Standard Financial Statement (SFS) Form. Your mortgage provider/servicer will provide you with this form and will help you complete it if you wish. Your mortgage provider/servicer cannot help you without completing this for: CBI SFS

All mortgage providers/servicers are fully committed to helping you address your financial situation using their expertise to find a resolution, where possible. Their focus is to keep you in your family home wherever possible, provided you are working with them to prioritise your mortgage repayments.

Not making full repayments or missing a repayment on your mortgage will mean that your credit record will be impacted – mortgage providers/servicers are required by law to report all outstanding loans to the Central Credit Register (CCR).

Funds (otherwise known as the beneficial owner) may have purchased your mortgage from a mortgage provider, who in turn engage regulated credit servicing firms to manage and administrate your mortgage on their behalf (such as Pepper, Mars, Start etc).

These credit servicing firms are regulated by the Central Bank of Ireland and all have developed a full suite of resolution options to help you if you are worried about making your repayments as they fall due or are already in arrears.

You don’t have to use a financial adviser – mortgage providers/servicers have expert staff who are trained in this area. Your mortgage provider/servicer will work with you to get a better understanding of your situation and inform you of the option(s) available to you.

However, there are services available to you that are free of charge if you do wish to speak to a financial advisor or to have someone else talk to your provider on your behalf.

The State’s Money Advice & Budgeting Service (MABS) is available to help with advice and assistance to deal with debt. The service also provides budgeting tools. This service is free, confidential and independent. MABS can be contacted on www.mabs.ie or on the MABS Helpline at 0818 07 2000.

Abhaile is a service to help homeowners find a resolution to their home mortgage arrears. It provides vouchers for free financial and legal advice and help from experts, which are available through MABS.

The aim of Abhaile is to help mortgage holders in arrears to find the best solutions and to keep them, wherever possible, in their own homes. A dedicated adviser will work with you and your lender to find the best solution for your situation.

Contact: 0818 07 2000 (Monday – Friday 9am – 8pm)

Website: www.mabs.ie/en/abhaile

You don’t need to prepare a budget before speaking to your mortgage provider/servicer, but you might find it helpful to have one in advance.

Once you have contacted your mortgage provider/servicer, you will be asked for information about your finances. This information will be documented on the Standard Financial Statement (SFS) and will include details of any income and expenses you may have.

This information is required to allow your mortgage provider/servicer to understand your financial circumstances and to be able to determine the most appropriate alternative repayment arrangement.

To prepare your SFS, you will need to calculate:

1. Your income to include salary/wages, benefits or other income; and
2. Your costs and expenses to include
   
   1. any mortgage or loan repayments you may have and
   2. the essential weekly or monthly costs you usually have (such as groceries, electricity, gas, childcare costs, mobile phone costs, TV and broadband costs, costs associated with running a car, health insurance etc.).

All of this information will go into the SFS to help you understand how much money you have to meet your costs and how much you may have left over each week or month to spend on less essential items. It is important that you ensure you have enough money to pay for essential items first.

You should work out what you consider to be essential for you and your household and ensure that is included in your SFS. Tools to help you work out your budget are available on the internet. Websites like www.mabs.ie, www.backontrack.ie/rle-calculator and www.ccpc.ie have useful templates for budgeting: www.ccpc.ie/consumers/money-tools/budget-planner. These budgeting tools capture a lot of the possible expenditure items you need to consider. These websites also have other useful information on how to budget.

If you are unable to make your mortgage repayments and are in arrears, or are in danger of going into arrears, ask your mortgage provider/servicer to explore with you how your mortgage might be restructured – taking into account your particular circumstances.

Depending on your individual circumstances and what you can afford to pay, it may be possible to restructure your mortgage in one or a combination of the following options.

Please note the offering of alternative repayment arrangements may differ between mortgage provider/servicer, it is important to contact your mortgage provider/servicer and talk through your options. Each mortgage provider/servicer will have the options available with them outlined in their Mortgage Arrears Resolution Process (MARP) booklet.

Some of these options may help you to sort out your mortgage difficulties temporarily until you find a long-term solution:

Capitalisation of arrears – this is where the outstanding arrears balance is added to the existing balance and repaid in a normal manner over the remaining term of your mortgage.

Term extension – you pay your mortgage over a longer period which would reduce the monthly repayments.

Split mortgage – your mortgage is split into two parts to reduce your monthly repayments, based on your current financial situation The split mortgage consists of a normal capital repayment loan, which is paid down monthly AND a warehoused “split” loan which does not accrue interest and doesn’t not have regular repayments made against it. You should check with your mortgage provider/servicer to see if they provide this option.

The options below are examples of temporary arrangements that some mortgage provider/servicers may offer until you find a long-term solution:

Interest only – you just 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.

Reduced payment – you pay less than the full amount for an agreed period.

Repayment break – you defer (delay) paying all or part of your mortgage for an agreed time.

Note: After assessing your SFS, your mortgage provider/servicer will work with you to find an appropriate solution whenever possible.

Any action taken to reduce your monthly mortgage payments today is likely to increase the overall cost of your mortgage in the future, but this action could be critical to your mortgage debt and necessary to help you keep your home. If or when your financial circumstances improve, you should contact your mortgage provider/servicer immediately. You can work with them to increase the amount of your mortgage repayment which will help reduce the overall cost.

If your mortgage provider/servicer is unable to restructure your mortgage, your provider will explore with you the suitability of one or other of the following options:

Trading down – you sell your property and buy a cheaper one, thereby reducing the size of your mortgage and monthly repayments.

Refinance with a Lifetime Mortgage – A Lifetime Loan is another name for equity release. A Lifetime Loan may allow people over 60 to release value from their homes, at an interest rate fixed for life. It is a planning tool for people aged 60 and over who own their own home and wish to release a lump sum from their asset or refinance your mortgage or other debts. You will retain ownership of your home. Please note that Lifetime Loans may not be suitable for everyone so before you enter into a Lifetime Loan agreement it is important to have considered all the alternatives and ideally involve others in the decision.

Insolvency – The Insolvency Service of Ireland (ISI) is an independent, Government organisation set up to help sort out your personal debt problems and to get you back on track. If you owe money and cannot afford to repay it, one of the following options may be open to you:

1. Personal Insolvency Arrangement: you may apply for this through a Personal Insolvency Practitioner (PIP). This allows you to settle and/ or restructure your secured and unsecured debts over a period of time, normally up to 6 years. (A mortgage is a typical example of a secured debt.)
2. Bankruptcy: you may apply to the High Court to be declared bankrupt.

Mortgage to rent – you may qualify for a Government scheme where you transfer the ownership of your home to an approved housing body to which you pay rent as a tenant. Click the following link for more information regarding the Mortgage to Rent Scheme.

Voluntary surrender – you agree for your mortgage provider/servicer to take ownership of the property to sell. You remain liable (responsible) for any amounts that you owe which are not covered from the sale of the property, however you may be able to enter into a settlement agreement with your mortgage provider/servicer whereby the remaining amount you owe is reduced or written off.

Voluntary sale – you agree sell your property and repay your mortgage with the proceeds of the sale Where there is a shortfall you will remain liable for that amount, however you may be able to enter into a settlement agreement with your mortgage provider/servicer whereby the remaining amount you owe is reduced or written off.

Visit www.backontrack.ie for further information.

Mortgage provider/servicers are required by law to report all outstanding loans to the Central Credit Register (CCR). Your mortgage provider/servicer is required to report any alternative repayment arrangement, such as restructuring a loan including a mortgage, to the CCR.

Not making full repayments or missing a repayment on your mortgage will mean that your credit record will be impacted on the CCR. A poor record on the CCR may impact your ability to get approval for credit in the future.

The information that a mortgage provider/servicer submits to the CCR builds up your credit history over time and is used to create your credit report. The information shown on the credit report that you receive will show up to 5 years of information. In the case of a loan still being repaid, the most recent 2 years of repayments will be shown on the report that the provider receives. For a mortgage that is closed or paid off, a provider will see the final 2 years of information. The information on a closed mortgage will no longer be on the report 5 years after the last repayment was made.

Please note that the information you request or access from the CCR is a credit report – it is not a “credit score”.

The credit report is one of a number of factors considered by a lender in a credit assessment.

More information is available on the CCR website here.

Yes, if your circumstances improve, it is important that you contact your mortgage provider/servicer and talk through your changed circumstances. Depending on your new circumstances you may be able to pay off your mortgage each week or month, and shorten the number of repayments you will have to make or by increasing the amount you pay each week or month which could reduce the overall cost of your credit.

The full range of options available to you will be discussed with you by your mortgage provider/servicer.

For some consumers switching your mortgage from your current provider/servicer to another provider may be an option. Even if your mortgage was a nonperforming loan at some stage in the past, if your financial circumstances have changed then switching your mortgage may be an option.

You will need to meet another mortgage lender’s lending criteria to avail of mortgage switching.

Switching from a credit servicing firm

Lenders AIB, Bank of Ireland, Permanent TSB, Avant Money, Finance Ireland and ICS Mortgages have agreed initial eligibility criteria to provide clear guidelines for home mortgage customers of Credit Servicing Firms who are seeking to switch their mortgage. Credit Servicing Firms have committed to working with these criteria to support customers switching and to ensure they are aware that they may have options to switch their mortgage. The main mortgage broker representative bodies, Brokers Ireland and the Association of Irish Mortgage Advisors, have also agreed to communicate these criteria to borrowers seeking to switch their home loans.

In order to be eligible to switch under these guidelines, customers need to be making full capital and interest repayments on their mortgage. In addition, customers must have no arrears on their home mortgage or any other lending in the past two years. Once customers meet these and other initial criteria*, applications will be assessed on a case-by-case basis in line with individual lender credit policy.

The initial criteria agreed by the main lenders are as follows:

• Customers must be repaying capital and interest on the full outstanding mortgage i.e. there is no split/warehoused element of the mortgage, and the mortgage is fully up to date
• The customers’ credit history, i.e. their Central Credit Register (CCR) record, must show a clean repayment track record without arrears for at least the past two years.
• Customers must be able to demonstrate that they have sustainable income which is adequate to repay the mortgage in full over the lifetime of the loan.
• Customers must have a satisfactory bank account performance i.e. no unpaid items such as a direct debit or standing order and all the customers’ other loans/debts must be up to date.
• The current Loan-to-value (LTV) of the mortgage must be less than 90%
• The circumstances that gave rise to any previous financial difficulty must have been resolved.

Once customers meet these initial criteria, applications will be assessed on a case-by-case basis in line with individual lender credit policy.

The dedicated phonelines for customers of credit servicing firms who wish to discuss their mortgage switching options are as follows:

• AIB – 0818 303 035 or visit Mortgage Switcher |AIB
• Bank of Ireland – 0818 200 390 or visit  Thinking of Switching? | Mortgages | Bank of Ireland  
• Permanent TSB – 0818 210 585 or visit Switching from another financial service provider (permanenttsb.ie)

You can find more helpful information here:

Information leaflet on switching your home mortgage from a credit servicing firm

Central Bank Explainer on Mortgage Switching

Switching your mortgage? Review your options – CCPC Consumers

AIB – Visit www.aib.ie/i-am/worried-about-payments. If you are worried about mortgage payments, you should call 0818 251 008. If you’re worried about loan payments, you should call 01 7725714. If you are worried about credit card payments, you should call 01 668 5500.

Bank of Ireland – Visit personalbanking.bankofireland.com/financial-wellbeing/cost-of-living-hub. If you have already fallen into mortgage arrears you can call the dedicated Home Mortgage Line on 01 4883046. For queries on credit card, loans or overdraft repayments contact the dedicated team on 0818 200 334.

BCM – Customers can visit ww2.bcmglobal.com for further information or call +353 (0)1 654 8800.

Cabot – Visit www.cabotfinancial.ie/contact. For information on Promontoria Scariff Mortgage Accounts you can call 01-4649070 or email Scariff@cabotfinancial.ie. For other mortgage accounts call 01-4649172 or email ASU@cabotfinancial.ie.

EBS – For further information you can visit www.ebs.ie/worried-about-payments or you can call 0818 330 044.

Haven – For further information you can visit www.havenmortgages.ie/worried-about-payments or call 0818 280 280

KBC – Customers can visit www.kbc.ie/en-US/help/mortgage-support/managing-your-debt or call 0818 93 02 35 or email customerservices@kbc.ie.

Mars Capital Oak – Visit www.marscapital.ie/oak/financial-difficulties or contact the dedicated Arrears Support Unit (ASU) on freephone 1800 852 940 or, if calling from abroad, +353 1 267 8033.

Mars Capital Snow – Visit www.marscapital.ie/snow/financial-difficulties or contact the dedicated Arrears Support Unit (ASU) on LoCall 1800 816 207 or, if calling from abroad, +353 1 525 5624.

Mars Capital Warrington – Visit www.marscapital.ie/warrington-bay/financial-difficulties or contact the dedicated Arrears Support Unit (ASU) on LoCall 1800 816 121 or, if calling from abroad, +353 1 526 8580.

Pepper – For further information you can visit www.pepper-advantage.ie or call their Helpline on 0818 828 828.

PTSB – For further information you can visit www.permanenttsb.ie/help-and-support/help-with-banking/repayment-difficulties. If you are in arrears, call 1800 855 010 or +353 21 6013800.

Start – For further information you can visit www.start.ie or contact 1800 818 000 or 01 2096300.

Spry – Customers can visit www.spryfinance.ie/contact for further information or call (01) 5822 570 or email info@spryfinance.ie.

For information on switching mortgage from a credit servicing firm:

AIB – 0818 303 035 or visit Mortgage Switcher | AIB

Bank of Ireland – 0818 200 390 or visit Thinking of Switching? | Mortgages | Bank of Ireland

Permanent tsb – 0818 210 585 or visit Switching from another financial service provider | Ptsb

Avant Money – www.avantmoney.ie

ICS Mortgages – www.icsmortgages.ie

Finance Ireland may be contacted through your broker. Further information is available here: www.financeireland.ie/products/residential-mortgages/overview

Alternatively, customers may also wish to talk to a mortgage broker for impartial advice on their options:

Association of Irish Mortgage Advisors – www.aima.ie

Brokers Ireland – www.brokersireland.ie

MABS
If you need advice and assistance to deal with any type of debt, whether it is mortgage, loan, credit card or overdraft, you can contact the State’s Money Advice and Budgeting Service (MABS). The MABS service is a free, independent, confidential and nonjudgemental service which is provided by skilled and experienced advisors for people who are in debt or at risk of getting into debt.

The MABS Helpline, 0818 07 2000, is open Monday to Friday, 9am to 8pm. The MABS face-to-face service is available in over 60 locations nationwide – see www.mabs.ie to find your nearest MABS office.

Abhaile
Abhaile is a service to help homeowners find a resolution to their home mortgage arrears. It provides vouchers for free financial and legal advice and help from experts, which are available through MABS.

The aim of Abhaile is to help mortgage holders in arrears to find the best solutions and to keep them, wherever possible, in their own homes. A dedicated adviser will work with you and your lender to find the best solution for your situation.

Contact: 0818 07 2000 (Monday – Friday 9am – 8pm)

Visit the website here.

The Insolvency Service of Ireland (ISI)

Where a borrower believes that they are insolvent i.e. unable to meet their loan repayments while maintaining a minimum standard of living they may be eligible for a personal insolvency arrangement. The Insolvency Service of Ireland (ISI) is responsible for the personal insolvency framework. Check out the website set up to help borrowers find out more about insolvency solutions at backontrack.ie

The Personal Insolvency Act introduced three new structures to deal with unsustainable debt, both secured and unsecured, as follows:

A Debt Relief Notice (DRN) to allow for the write-off of debt up to €35,000, subject to a 3-year supervision period.

A Debt Settlement Arrangement (DSA) for the agreed settlement of unsecured debt, with no limit involved, normally over 5 years.

A Personal Insolvency Arrangement (PIA) for the agreed settlement of secured debt up to €3 million (though this cap can be increased) and unsecured debt, with no limit involved, normally over 6 years.

Further details of the insolvency framework and the individual arrangements are available at the ISI website. View the ISI website here.

Citizens Information Service

The Citizens Information Board is the statutory body which supports the provision of information, advice and advocacy on a broad range of public and social services. You can get information and advice face-to-face at your local Citizens Information Centre by phone through the Citizens Information Phone Service on 0818 07 4000, or by clicking here to access the Citizens Information website.

FLAC

Free Legal Aid Centres (FLAC) is an independent charity that campaigns on legal issues. It provides an information and referral line (01 906 10 10) and organises evening Legal Advice Centres throughout Ireland in conjunction with the Citizens Information Board. Click here to access the FLAC website.

Competition and Consumer Protection Commission

The Competition and Consumer Protection Commission’s personal finance information website provides information and advice on a range of financial issues including managing your money, tackling debt and repossession and making a complaint.

You can find more helpful information about the Consumer Protection Code 2012 here and advice on switching your mortgage from the CCPC here.

Bankruptcy

Where a borrower believes that they are in serious financial difficulty and a voluntary payment plan or insolvency arrangement is not sustainable, they may consider bankruptcy. The rules regarding Bankruptcy were amended in 2016 to reduce the duration of an arrangement to 12 months, previously 3 years. The duration of a bankruptcy payment order was reduced from 5 years to 3 years, except in cases of non co-operation or the concealment of assets when it can be extended for a longer period.

The Insolvency Service of Ireland (ISI) is responsible for the bankruptcy system and further details can be found here at the ISI website.

Mortgage Interest Tax Credit 2023

The Mortgage Interest Tax Credit (MITC) was announced by the Minister for Finance in Budget 2023. Broadly, the new tax credit is a one-year tax credit for taxpayers who have made mortgage interest payments in respect of a qualifying loan for a principal private residence, where a number of conditions are satisfied. The relief is available to taxpayers with mortgage balances of between €80,000 and €500,000 as of 31 December 2022. The credit is available in respect of the 2023 tax year only and is based on the increase in interest paid in 2023 over interest paid in 2022. The increase will, subject to a cap of €6,250, qualify for relief at the standard rate of Income Tax (20%). Thus, this equates to a maximum tax credit of €1,250 per property. Only one credit is available per property.

Revenue have published their guidance on the Mortgage Interest Tax Relief. Details for applying for this tax will be available from Revenue at the end of January 2024 on www.revenue.ie