Restructure option where arrears are added to the principal balance


New Member
Hi Brendan,
Any advice with regard to my mortgage details below would be much appreciated.

Original loan advanced: €331,000 in 2008
Outstanding balance: €333,000
Arrears: €61,000
Monthly arrears: €1900

Bank offered me a restructure where over five years they would reduce monthly payments to €1400 @ 4.31% reverting back to norm after the five years.

I appealed this on grounds that given the remainder of my working life is 15 yrs, payments would have to be dramatically increased after the five years in order to pay the remainder of the mortgage.

In my appeal I asked for a split mortgage instead where i repay capital and interest on €200,000 (60%) over 15yrs @ 3.25%, and €133,000 (40%) to be parked until expiry of 15yr term.

Bank refused the split mortgage arrangement and came back with an alternative five year arrangement during which they will reduce interest from 4.31% to 0.5% and extend the remaining term from 16y 3m to 17y 1m at €1200 per month. Again, after the five year things revert back to norm.

I would be very interested to hear peoples thoughts on this. Is it a good offer?

Also, i notice that in the new arrangement the bank propose to capitalise €59,000 of the arrears by adding it to the principal, so that it forms part of the principal balance.
What does this mean exactly?

Thanks in advance for any help or advice in regard to this.