# BPFI issues FAQ on payment breaks



## Brendan Burgess (25 Mar 2020)

The banking and payments industry is fully committed to working with the Irish Government, the
Central Bank of Ireland and other key stakeholders during this extraordinary time to provide
financial support to customers affected by COVID-19.  

We are committed to supporting individual customers, families, businesses and communities
across the economy during this time. As the situation evolves, there will doubtless be a
requirement to further address changing needs across the economy and the banking industry is
ready to respond as quickly as it possibly can.  

Many individuals and families are hugely concerned about how they will cope financially in the face
of job losses, reduced hours, additional costs arising for childcare or elderly relatives.  Businesses
are equally dealing with significant challenges, trying to support employees, customers and
suppliers.  

How are banks supporting customers? 

Our  retail banks (AIB, Bank of Ireland, KBC, Permanent tsb and Ulster Bank), non-bank mortgage
lenders (Finance Ireland and Dilosk/ICS Mortgages) and credit servicing firms (Investec Private
Finance Ireland Ltd, Lapithus, Link Group, Mars Capital, Pepper and Start) have put in place
measures to help personal customers and businesses (retail banks only).  

The following are the key elements:
• A payment break for up to three months is available to both personal and business 
customers. This can be followed by ongoing reviews depending on the scale and extent of
the situation 
• Court proceedings are being adjourned for three months
• Various working capital facilities and supply-chain supports are available to businesses 

What is a payment break? 

Mortgages (for private dwellings and buy-to-lets), Personal Loans and Business Loans may be
frozen for up to three months, to be followed by ongoing reviews depending on the scale and
extent of the situation.  

Payment breaks can take a number of forms depending on what best suits your specific situation.  
1. ‘Moratorium’ Payment Break – generally this means that your full loan repayment is 
postponed for an agreed period of time so you do not pay any capital or interest. 

Ordinarily, at the end of this period, loans return to full capital and interest payments. At the
end of the agreed period, your future loan repayments will increase so that the loan is fully
repaid within the original term of the loan – see How does a payment break operate?

2. ‘Interest Only’ Payment – you pay only the interest due on the loan during the agreed
payment break. You do not pay any capital which means that your repayments will be less 
but also that your loan balance will not reduce during this period.  

Ordinarily, at the end of this period, loans return to full capital and interest payments. At the
end of the agreed period, your future loan repayments will increase so that the loan is fully
repaid within the original term of the loan – see How does a payment break operate? 

Am I eligible for a payment break if my existing loan is in arrears? 

Lenders are committed to supporting all borrowers – including borrowers who are already
financially distressed and have had their loan restructured.  You or your appointed adviser should
contact your lender to see what further forbearance measures can be put in place. 

How does a payment break operate? 

A payment break effectively gives you breathing space – a period of time during which you do not
have to make repayments on your loan.  For example, if you take a mortgage payment break of up
to three months, your lender will ordinarily spread your repayments over the remaining,
outstanding term of the existing mortgage so that your mortgage is repaid within the original term.   

Where you have the capacity to do so, another option which may suit you would be to pay the
interest as it arises during the payment break.  

Either way a payment break will give rise to higher repayments spread out over the remaining term
of the loan. 

The following illustrates how a payment break would work out in practice: 








How do I apply for a payment break? 

Not all customers will need a payment break and it is important that customers who can afford to
continue making repayments should do so – that way debt is not built up unnecessarily.  

Not all customers will need the same form or length of a payment break; and lenders may need to 
try to tailor something different depending on individual circumstances. 

Contact your lender to request a payment break.  Each lender is putting in place as streamlined
and simplified an application process as possible; this may vary across lenders as between online,
email, telephone or paper based.  All lenders are dealing with a considerable increase in queries
and applications at this time, so you may need to try a number of times to make contact.   

Please understand that staff at all lenders are themselves working in very challenging
circumstances and are doing their best to deal with all customer cases as quickly and efficiently as
possible. 

What happens at the end of a mortgage payment break? 

At the end of a payment break your ongoing payments will be recalculated to include the interest
charged during the payment break.  These payments will be higher – reflecting the three missed
payments and the interest charged - see How does a payment break operate? 

Will my mortgage rate change as a result of using a payment break? 

No, your mortgage rate will not change due to your availing of a payment break.   

Will a repayment break affect my credit record? 

Lenders are working with the regulator, the Central Bank of Ireland, to develop practical measures
so that the credit record of those who avail of a payment break will not be adversely affected.   

Helpful links for further information relating to Covid-19 

ends






• AIB – https://aib.ie/covid19/online-forms
• Bank of Ireland – [broken link removed]
FAQ-2.pdf
• KBC – [broken link removed]
message-for-kbc-customers
• permanent tsb – https://www.permanenttsb.ie/about-us/notices/2020/march/covid-19/
• Ulster Bank – https://digital.ulsterbank.ie/personal/help-and-support/coronavirus.html
• Dilosk/ICS Mortgages – http://www.icsmortgages.ie/ics-mortgages-covid-19-information
• Finance Ireland – https://www.financeireland.ie/covid-19-announcement-business-as-usual/
• Mars Capital – [broken link removed] 
• Pepper – https://www.peppergroup.ie/covid-19-update 
• Start – [broken link removed] 

Banking & Payments Federation Ireland represents the interests of some 100 member


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## Brendan Burgess (25 Mar 2020)

Brendan Burgess said:


> Mortgages (for private dwellings and buy-to-lets), Personal Loans and Business Loans may be
> frozen for up to three months, to be followed by ongoing reviews depending on the scale and
> extent of the situation.



I have no idea what this means? 

Frozen suggests that interest is not charged, but I don't believe that to be the intention. 

Brendan


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## Brendan Burgess (25 Mar 2020)

OK, they have confirmed indirectly that they are charging interest. 




Brendan Burgess said:


> What happens at the end of a mortgage payment break?
> 
> At the end of a payment break your ongoing payments will be recalculated *to include the interest
> charged during the payment break.* These payments will be higher – reflecting the three missed
> payments and the interest charged


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## Brendan Burgess (27 Mar 2020)

I think that someone reported here that an AIB staff member told a borrower that they had to have two months' savings to qualify for a mortgage break. I didn't believe the story.

Bizarrely, it's true. 









						Internal bank documents reveal AIB mortgage break did require savings before meeting with minister
					

At the end of last week and over the weekend customers complained of issues they had accessing this payment deferral.




					www.thejournal.ie
				




The initial plan and AIB rolled out the scripts to their staff was that you wouldn't qualify if you didn't have savings.  

It's the very opposite of what it should be.   If someone has savings, then they do not need a payment break until they have used up their savings. 

If they have no savings, they need a payment break. 

Brendan


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## JMJR (29 Mar 2020)

Please see below my query and response received from Mars Capital.

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Hi John,
I can assure you that we are doing everything within our power to help our customers during the present circumstances.
Please call us on 1890 303 702 to discuss your circumstances and we will help you best we can.
Kind Regards,
Mars Capital
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*From:* John
*Sent:* 24 March 2020 15:33
*To:* Ireland Mars Capital <mars.capital@marscapital.ie>
*Subject:* Irish Central Bank and mortgage payment moratorium
Dear team,
I am writing to ask what are the MarsCapital proposals for the mortgage payment moratorium that has been agreed, in principle, with the Irish Central Bank.
Although the initial press release from the ICB was on 19 March last, and a meeting with the Irish Department of Finance being held on 18 Mar 2020, I can see no mention of any scheme on your website as of today [24Mar2020]

With best r
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