Applied for recapitalization with ptsb, offered a Moratorium?

Personal and income details
Net Teacher (permanent since late last year) take home €2545 per month.
Net income partner/spouse: Private sector p/t €1550 per month
Income history:
Number of children 3
Amount of child benefit received €390
Amount of Mortgage Interest Supplement received 0

Home loan
Lender: ptsb
Amount outstanding: €304k
Value of home: €197,000
Interest rate: SVR 4.34%
Monthly repayment: Currently paying full repayment of €1536 for last 6 months. Pay in two tranches of €770 over the phone, as I get paid every fortnight.
Amount in arrears €8700
Credit card €1.5k

Summary of discussions and agreements with the bank:

Had a 3 month full moratorium, then interest only for 3 months and half-payments for 6 months last year when I was not working full-time. Was working casually and wife had no job, but made the repayments requested each month. Working full time since October 2012, and making full repayments of the amount due since November 2012. Was told by ptsb that we needed to make full repayments for 6 months to apply for a recapitalization of the interest. Did all of this by paying every 2 weeks over the phone, and finally got an appointment lat month, gave full financial statement.

At interview, was quoted a figure of €1586 to re-cap arrears, and was delighted with this. We waited and waited and today get our offer....................of a moratorium to temporarily re-pay €1351, with a repayment amount of €1546 for the term of the mortgage afterwards of €1546 per month. Without restructure, ptsb say the repayment amount will be €1612.

Not happy about this at all today, and drafting a letter to ptsb to appeal. Never had to do this before, what should I say? All advice appreciated....

Edit: can anyone change the typo in the title?

Hi Joe

Most people don't understand what capitalizing (not recapitalizing, by the way) arrears means. Your post is confusing, so I am not sure you understand it either. Check out this Key Post: "Capitalizing arrears"explained

In general, a "moratorium" means a payment moratorium, where no payment is being made. Are ptsb using the word to mean a moratorium on the arrears - in other words, they won't chase them for the time being? Or are you using the word to describe your situation?

Is this the situation you find yourself in?

You want
To capitalize the arrears
to increase your repayments from €1,536 to €1,586/€1,612


They want
To leave the arrears on file, but not pursue them for the "moratorium" period
To reduce your repayments to €1,351?

As you have a SVR, you can overpay your mortgage without penalty, so I suggest you set up a direct debit to pay €1,612 per month, if that is what you want to do.

This will reduce your arrears by €250 per month anyway.

After the "moratorium" is up, you can then ask again for the arrears to be capitalized.

Lenders are slow to capitalize arrears for two reasons

1. They think that the borrower can actually pay the arrears
2. If the borrower can't pay the arrears, they want to keep the arrears high so that they can use them to repossess the property.

Neither seems to apply in your case, so I am not sure why they are refusing.



When answering, you might let us know the remaining term of the mortgage, your ages, and whether you have asked for an extension of the term.

I see that I suggested you read that Key Post before.

http://www.askaboutmoney.com/showpost.php?p=1313619&postcount=6

At that stage you were looking to borrow money at a high rate to pay off cheap arrears.

It's actually possible that ptsb may be acting in your best intersts here.

By the way, you say you have €1,500 outstanding on a credit card? Are you paying interest on this? If so, you should clear that first before "overpaying" your mortgage.

It might also be worth building up a small rainyday fund of maybe €2,000.

Brendan

Thanks Brendan,

Meant to say we wanted to capitalize the arrears, and the solution you have offered will work for us, not sure if PTSB will be happy though.

The credit card was cleared every month since we got it until May of this year, when we had a bad run of big bills, ie €800 for oil as the spring was so cold, two cars to tax, house insurance and a broken oven. We are building up a fund to cover these types of bills for next year, and I may put one or two of them on direct debit.

I think we might have about 26 years left on the mortgage, and looking at the correspondence today, I think (hope!) that they made a mistake in assessment of our application. Seems a strange one alright that ptsb are looking for less money....

Update on our case is that we after applied for capitalising of arrears, PTSB instead offered a moratorium for 6 mths which we have reluctantly accepted. So we now have a monthly payment of €1351 per month, instead of the €1536 we had being paying. No decline by PTSB in writing of the request to cap the arrears - just the offer of a moratorium, which, we were told verbally, was adjudged by PTSB to the the most suitable option for us, and is a "part capital and interest arrangement".

We had a credit card debt of €1500 approx which I think may have been a factor in the decline of the arrears request, now have it down to €1100. Having thought about it for a week or so, we accepted the offer from PTSB, and we are paying the revised lower payments of €1351 + €20 pw off the arrears. We pay every 2 weeks, and specifically do do payments using Laser over the phone to identify payment to arrears and payment of the agreed payment amount.

Will hopefully be given capitalisation of the arrears balance when we apply again in 5 months!

Hi Joe

I am intrigued by the use of the word "moratorium". Is that their word or yours?

Does it mean that they won't pursue the arrears for 6 months?

Brendan

It's their word, not mine - it's the most intriguing aspect of the whole deal, and not a moratorium in the strictest sense of the word IMO.