Overview of mortgage debt

Difficulty paying the mortgage

A residential mortgage is a loan from a lending institution to help you buy a house, flat or apartment. When you get a mortgage the lending institution gets a claim on your property. If you have, or are likely to have, a problem paying your mortgage, you should talk to the lending institution as soon as possible. Consumer protection codes provide that your lender must take certain steps to deal with any problems you have in paying your mortgage before attempting to repossess your property.

Delaying and allowing arrears of payment to build up will make the problems worse. Lending institutions do not want to repossess your home. They want you to continue your payments.

If you are in debt or starting to have financial difficulties you can get help from the Money Advice and Budgeting Service (MABS). MABS provides a free service to help you deal with your debt and make a budget based on your income. It has also published A Guide to the Code of Conduct on Mortgage Arrears(pdf).

MABS and the Irish Banking Federation (IBF) have developed a joint protocol (pdf) setting out how MABS money advisers can work together with creditors to help people to address and manage debt problems, including problems with mortgage debt. There is also a guide to how the protocol works.

The IBF has also developed a Guide to Dealing with Mortgage Repayment Difficulties (pdf) in consultation with MABS. The Guide is available on the dedicated website helpinghomeowners.ie.

If you are having difficulty paying your mortgage because you are unemployed or are working under 30 hours per week you may be entitled to Mortgage Interest Supplement.

FLAC (the Free Legal Advice Centres) have published a useful set of guidelines on mortgage arrears (pdf).

Four important steps

As soon as you realise that you may have a problem paying your mortgage, you can start to take action to deal with the situation. A MABS adviser can help you to do this, either face-to-face or via the helpline. You can also follow the 4-step self-help path that is described in detail on the MABS website. The 4-step path can be summarised as follows:

1. Assess your situation. Make a list of all your debts. Check that each debt is in your name. Identify the debts needing immediate attention (for example, your mortgage arrears). Get in touch with the lenders immediately - preferably in writing. There are sample letters on the MABS website.
2. Make out a budget. List how much money is coming into your household each week (or month) and how much is going out. You can then work out how much you can afford to offer towards paying your debts and how you can best plan your spending in the future. You can get blank budget sheets and spending diaries from the MABS website or through the helpline.
3. Deal with the debt. Write to the lender, making an offer of the amount you can afford to pay and explaining your financial situation. The MABS website has sample letters and blank financial statements.
4. Organise a method of paying the agreed amount. You can do this in various ways, such as direct debit, internet banking or a MABS Budget Account.