# Mortgage breaks during Covid - 19



## nuller (20 May 2020)

I have availed of the 3 month break and considering extending to 6 months. What are the full implications of doing this regarding my mortgage payments going forward?
I am on a tracker, my bank are suggesting the 6 months unpaid will be added on to the principal and paid monthly for the remaining time on the mortgage which is 22 years. I think this means there will be a slight increase in my monthly payment but is there anything I should worry about? For example, if the interest rates rise considerably will I end up paying back a lot more due to taking the 6 month moratorium?


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## dubdub123 (21 May 2020)

I would ask your lender to provide you with figures first so that you an estimate how much the loan will be after the six month period. 
Did you get clarification that the moratorium will not impact your credit rating?  I'm considering taking moratorium also but unclear regarding whether 1) it's reported but lenders are stating that it will not affect future borrowings or 2) that it is not reported..


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## Sadim (30 Jun 2020)

Like Nuller I availed of the 3 month break and then the extended 6 month break. However, unlike Nuller I had only 15-16 months to go on my mortgage term and a balance pre-Covid repayment break of €16,570. My monthly repayments were €932 pre-Covid now the bank tells me it will increase to €1,586 over the remaining term! I am self-employed and cannot afford an additional €654 per month. I was aware at the outset that claiming the Covid break in the absence of a term extension would lead to higher repayments if the bank was to stick with the original term however, I assumed the bank would have been open to a short term extension for these near the end of their mortgage term.

Anyway, I contacted my bank (BOI) and was immediately referred to their "Arrears Support Unit"!! I got a bit snotty with the guy on the other end saying I was not in arrears and only wanted a short extension to keep my repayments the same. Turns out I have to complete a Standard Financial Statement (SFS) containing a lengthy financial questionnaire. If I complete this I bet they will come back saying I should spend less in the off-license (probably true!), cut out Netflix subs and stop SOs going out to 2-3 charities I support.

I think this level of scrutiny is excessive in the context of only asking for a short term extension maintaining level repayments and an LTV of <5%. I do not want to fall into the hands of the Arrears Unit, God knows what further intrusions or repercussions come with that. I have some deposits earmarked for the young lassie starting college this year and my wife will be retiring next year with a tax-free lump sum of €118k next year. I have a private pension fund too but it is well down from pre Covid (-18%) so, I want to give that a chance to recover. 

This seems heavy-handed from BOI just for a short term extension?? It strikes me that this issue of temporary repayment breaks was addressed in the absence of showing the impacts for future repayments, particularly for those with a short period of the mortgage term remaining. Any ideas??


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## Sunny (30 Jun 2020)

Sadim said:


> Like Nuller I availed of the 3 month break and then the extended 6 month break. However, unlike Nuller I had only 15-16 months to go on my mortgage term and a balance pre-Covid repayment break of €16,570. My monthly repayments were €932 pre-Covid now the bank tells me it will increase to €1,586 over the remaining term! I am self-employed and cannot afford an additional €654 per month. I was aware at the outset that claiming the Covid break in the absence of a term extension would lead to higher repayments if the bank was to stick with the original term however, I assumed the bank would have been open to a short term extension for these near the end of their mortgage term.
> 
> Anyway, I contacted my bank (BOI) and was immediately referred to their "Arrears Support Unit"!! I got a bit snotty with the guy on the other end saying I was not in arrears and only wanted a short extension to keep my repayments the same. Turns out I have to complete a Standard Financial Statement (SFS) containing a lengthy financial questionnaire. If I complete this I bet they will come back saying I should spend less in the off-license (probably true!), cut out Netflix subs and stop SOs going out to 2-3 charities I support.
> 
> ...



Those figures don't really make sense. They seem to be telling you that you need to repay over 10k extra because you took a 6 month break on a 16 month loan??

Talk to them again. You could get a two year personal loan at 7.5% and repay that mortgage and still be only repaying about 800 a month. So where are they getting the €1586 a month from??


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## michaelm (30 Jun 2020)

Sadim said:


> My monthly repayments were €932 pre-Covid now the bank tells me it will increase to €1,586 over the remaining term!


Methinks that as the remaining term is less than a year the repayment would have to jump up to clear the mortgage by then.  You're paying the remainder over 10 months instead of 16 months, the payment break didn't increase the term.  The extra you'll be paying is roughly the 6 months interest on the outstanding balance at mortgage rates.


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## Sadim (30 Jun 2020)

Sunny said:


> Those figures don't really make sense. They seem to be telling you that you need to repay over 10k extra because you took a 6 month break on a 16 month loan??
> 
> Talk to them again. You could get a two year personal loan at 7.5% and repay that mortgage and still be only repaying about 800 a month. So where are they getting the €1586 a month from??


I am reading their figures from the letter BOI sent me dated 3rd June. 

- Pre Covid repayment break: €932/month (Tracker of ECB + 1.02%)
- Post Covid : increase of €654/month => total monthly repayments of €1,586/month
- Mortgage expiry: Aug21

Right enough, when you say it the increase in repayments does sound high. I opted for a 6 month break (€932 x 6 = €5,592). Break started IN April so, finishes in Sept leaving 10 months remaining term...... €5,592 / 10 = €560 p/month increase. I know there is interest to add on but at a rate of 1.02% its impact is minimal.... I can't see how they get an increase of €654 in monthly repayments?

Anyway, my bigger issue is being directed at the Arrears Unit solely because I am looking for a 6 month term extension. I have a 100% clean repayments record and have never had any contact with them on the conduct of my mortgage since Day1. Ironically, their letter states Option 3 is to extend the mortgage term for 3 months in the event you only took the original 3 month break. However, if you extend that to a 6 month break there is no option to extend the term for 6 months too!


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## Sadim (30 Jun 2020)

michaelm said:


> Methinks that as the remaining term is less than a year the repayment would have to jump up to clear the mortgage by then.  You're paying the remainder over 10 months instead of 16 months, the payment break didn't increase the term.  The only extra you'll be paying is the 6 months interest on the outstanding balance at mortgage rates.



Yes, I understood that and knew about it at the time. In fact, I flagged the issue of accelerated repayments post repayment break for near-expiry mortgages to Charlie Weston when the banks first announced these break options. 

It just seems strange that their letter included Option 3: mortgage extension of 3 months for those who availed of the first 3 month break but did not include a term extension for those who availed of Option 2: a further 3 month break (total 6 months). Then they compound that with diverting you off to an Arrears Unit if you want the 6 month term extension but not if you want a 3 month extension!


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## Lazare (30 Jun 2020)

It's nuts (and seems plain lazy) that they referred you to ASU, particularly given your LTV/risk profile. And I wonder why there is no option to term extend following a 6 month payment break? Would it be worth supplying the SFS and if you weren't granted the extension then submitting a complaint/appeal? AFAIK an independent area would have to look at this as it's a regulatory driven process (ASU's are highly regulated and so this could work in your favour), usually managed by people with a bit more experience and cop on. I'd go that route.
Incidentally, is a term extension more favourable than increased repayments over the existing term? Or do the bank profit either way from you having taken the repayment break? I'm just coming off a Covid 3 month break and hadn't considered this...


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## llgon (30 Jun 2020)

Agree that it's ridiculous the way BOI are treating this Sadim.

You mention that you have deposits saved for your daughter starting college this year. Would this be enough to cover her for this year and help you make the increased repayments for the last ten months? You could then used the cash freed up by finishing the mortgage to fund your daughter in further years. Not what you had planned to do but financially you would be better off. And you could save yourself from a lot of stress dealing with the bank.


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## Sadim (1 Jul 2020)

Lazare said:


> It's nuts (and seems plain lazy) that they referred you to ASU, particularly given your LTV/risk profile. And I wonder why there is no option to term extend following a 6 month payment break? Would it be worth supplying the SFS and if you weren't granted the extension then submitting a complaint/appeal? AFAIK an independent area would have to look at this as it's a regulatory driven process (ASU's are highly regulated and so this could work in your favour), usually managed by people with a bit more experience and cop on. I'd go that route.
> Incidentally, is a term extension more favourable than increased repayments over the existing term? Or do the bank profit either way from you having taken the repayment break? I'm just coming off a Covid 3 month break and hadn't considered this...



The bank were always going to earn more interest the longer the mortgage was suspended, interest accrued the whole time. I have no objection to that as you owe them the outstanding balance and therefore, they are entitled to charge interest on it. What I did not expect was them to invoke this Arrears process where you asked for a simple term extension..... not even a long one at that. All the more daft too when you consider they are giving in their Options letter a right to take a 3 month term extension if you take a 3 month repayment break.... but not the same for an extended 6 month break.

I was aware of this possibility before I opted for the repayment break back in April but assumed given the low LTV, the low outstanding balance they would be a bit flexible. 

I have no intention of going down this Arrears route as I am sure that has implications for my credit record but it leaves me with €654 per month higher repayments for the next 15 months or so. I am self-employed and that would stretch my resources big time. I think I am going to write to them to explain it fully. Sometimes with these customer service types you get the standard responses


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## Sadim (1 Jul 2020)

llgon said:


> Agree that it's ridiculous the way BOI are treating this Sadim.
> 
> You mention that you have deposits saved for your daughter starting college this year. Would this be enough to cover her for this year and help you make the increased repayments for the last ten months? You could then used the cash freed up by finishing the mortgage to fund your daughter in further years. Not what you had planned to do but financially you would be better off. And you could save yourself from a lot of stress dealing with the bank.



Yes, that is definitely possible IIgon. I could clear the o/s mortgage easily enough. However, I think in the post Covid era having a cash buffer is important to smooth out the bumps so, I am anxious to preserve my deposits.... remember, the world of the self-employed is pretty precarious right now! I just don't think I am being unreasonable asking for a 6 month term extension.


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## Lazare (1 Jul 2020)

Sadim said:


> I have no intention of going down this Arrears route as I am sure that has implications for my credit record but it leaves me with €654 per month higher repayments for the next 15 months or so. I am self-employed and that would stretch my resources big time. I think I am going to write to them to explain it fully. Sometimes with these customer service types you get the standard responses



Completing and sending an SFS to the Arrears Support Unit, and even appealing the outcome of the credit decision following that, does not impact your credit rating. Non payment of your mortgage is what would affect it (even then as long as you are co-operate on finding a resolution will your credit rating not be affected). But, I can fully understand you not wanting to jump through the hoops of completing the thing, it's a completely over the top ask on their part...


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## Hollymount123 (10 Jul 2020)

Does anyone know what criteria the Bank of Ireland uses to assess an application for a precautionary Covid-19 mortgage repayment break? Their website has no information about this.


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## Sconeandjam (15 Jul 2020)

Hollymount123 said:


> Does anyone know what criteria the Bank of Ireland uses to assess an application for a precautionary Covid-19 mortgage repayment break? Their website has no information about this.


Have a look on the following page. 
[broken link removed]


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## Sadim (16 Jul 2020)

llgon said:


> Agree that it's ridiculous the way BOI are treating this Sadim.
> 
> You mention that you have deposits saved for your daughter starting college this year. Would this be enough to cover her for this year and help you make the increased repayments for the last ten months? You could then used the cash freed up by finishing the mortgage to fund your daughter in further years. Not what you had planned to do but financially you would be better off. And you could save yourself from a lot of stress dealing with the bank.


I get what you are saying and yes, I probably could clear the mortgage and take care of her Year1 in college but my fundamental point was 
a) I don't think that I was making an excessive request.... 6 months term extension?
b) Why do I default into the Arrears Unit for a 6 month term extension while not for a 3 month extension?
c) I want to preserve cash in the short term as who knows what this Covid impact will be?


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## Sadim (16 Jul 2020)

Lazare said:


> Completing and sending an SFS to the Arrears Support Unit, and even appealing the outcome of the credit decision following that, does not impact your credit rating. Non payment of your mortgage is what would affect it (even then as long as you are co-operate on finding a resolution will your credit rating not be affected). But, I can fully understand you not wanting to jump through the hoops of completing the thing, it's a completely over the top ask on their part...


There was a time when you called in and met the manager, explained the circumstances and he/she had the authority to give some flexibility. Now you deal with their main switch number (01-6113333) and you could be waiting 30mins.... life is too short! "All our lines are busy...." of course they're busy, did you not get the memo about Covid!

Then there is this routine to complete a MFS.... its like a bloody strip search. Look, all I want is a 6 month extension and no frustrating process to get it. If I can't get it without the full Monty they want then fine, I will forget it.

I actually was an employee of BOI 20+ years ago for 3 years. They were a noble, cautious, conservative bank back then. Now they are only trying to outdo AIB, Deutsche and HSBC in nefarious anti-customer practise


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