Irish Bank Mortgage Arrears: 5 Steps To Avoid Repossession

As soon as you know that your next mortgage repayment will be a problem for you, write a draft letter to your bank setting out the situation and your proposals to deal with it. Writing this draft letter will help you organise your plan of action and work out how much you can realistically and genuinely afford to repay. A clear picture of your household budget is vital before you commit yourself to any repayment schedule.

Gather together all of the documentation you have in relation to your income, in order to support your claim that the mortgage amount you propose to repay each month is genuinely all you can afford. Setup a folder and take copies of all the letters you send out, as well as notes of any phone conversations you may have with the officials of the bank.

The next step is to find out what department of your bank deals with cases like yours. All Irish banks have dedicated departments for mortgage repayment issues and a quick phone call to your bank will provide you with a contact name to send your letter to. You should let your bank or mortgage lender know as soon as possible that repaying your mortgage is a problem. Do not avoid or ignore the issue, since the bank or building society definitely won't. The earlier you contact the bank, the more options you may have.

Contacting the bank with the minimum of delay lets them know that you are willing to deal with the problem in a responsible way.

If redundancy has has caused your financial problems, go through all the paperwork you have relating to the original signing of the mortgage agreement, to see if you have mortgage repayment protection insurance. Find out from your local citizen's advice centre if you qualify for receipt of mortgage interest supplement.

The bank may reply to your letter with a different repayment plan than the one you proposed. The bank may propose the option of extending the term of the mortgage, so that the amount due each month is reduced. They may alternatively offer you the option of an interest only plan or they may offer to suspend payments for a set period of time.

Ask the bank to put in writing how much their plan will cost in the long term and if accepting their plan will affect your credit rating. Keep in mind that the bottom line to any negotiations over a repayment schedule is the amount that you can afford to repay each month.

Hopefully, you will be able to agree a mutually beneficial repayment plan with the bank, whereby you can still repay your mortgage at a level you can afford and the bank will still get some of their money back each month. If however, your financial circumstances worsen, you may simply not be able to repay your mortgage on a long term basis.

In that case, you need to consult an advisor from your local Citizen's Advice centre or from MABS, or get legal advice from a solicitor specialising in these situations. Simply moving out of the house and returning the key to the bank will unfortunately not remove your liability for the mortgage and may involve you incurring charges, interest and selling costs.

This article is for general guidance only, has no legal standing and is subject to errors and omissions. You should always consult your Citizen's Advice centre, Money Advice & Budgeting Service (MABS) or a solicitor where necessary.

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