3 Ways to Protect Your Home in Mortgage Arrears


image of a gouseFor many people struggling with mortgage arrears a constant question is whether the problem can be solved and whether that solution will mean their home can be protected.

Over the last while there have been several innovations introduced which, in most cases, mean that homes can be protected.

These include:

  • Bank offered solutions
  • Personal Insolvency
  • Mortgage to Rent  Scheme 

In this article, we’ll look at each way to protect your home  in mortgage arrears in turn.

Bank offered solutions

Despite much misguided commentary neither banks nor funds want to repossess homes.

However, where a borrower does not co-operate or engage with the lender there may be no other option available to the lender,

So, the first step is all about co-operation.

Co-operation means:

  1. Communicating with the lender
  2. Providing the lender with a Standard Financial Statement and supporting documentation
  3. Paying what you reasonably can in a timely and regular manner

Once you are co-operating you are protected and the lender is required to offer a solution – if a solution exists.

Solutions include:

  • Capitalisation of arrears
  • Extension of the term
  • Split Mortgage
Personal Insolvency

Under this statutory scheme, a borrower can be offered a deal once they can at least afford a mortgage based on the current market value of the property, extended over the longest period possible, and based on the lowest reasonable interest rate.

Furthermore, all other debts can be dealt with under this system.

The real strength of the system is that even if the bank or fund refuses the offer, a Court can intervene and impose the deal on the lender.

To recap:

If you can afford a mortgage based:

  • On the current market value of the property,
  • Extended over the longest period possible, and
  • At the lowest reasonable interest rate

Your home can be saved.


Mortgage to Rent

The Mortgage to Rent scheme is available for those whose mortgage is unsustainable and who qualify for social housing.

Under Mortgage to Rent a borrower surrenders their home to the lender who then sells the property to an Approved Housing Body or other provider. The former owner then becomes a tenant in the property on a 20 or 30-year term paying an affordable or means tested rent.

The borrower may re-purchase the property in the future if their circumstances change.



What is Mortgage to Rent and How does it Work?

mortgage to rent, houses in a line

The Mortgage to  Rent Scheme can help people to stay in their homes after they have relinquished ownership of the property due to their inability to meet the mortgage repayments. 

Thousands of people in Ireland cannot afford their mortgage. Falling into mortgage arrears  puts them in danger of having their home repossessed and ultimately of being evicted. Naturally this is a very difficult experience for people, who have often lived there for many years and established roots in their local communities. 

The Mortgage to Rent Scheme is designed to help these people by enabling them to stay in their home without the debt burden of owning the property.

The Mortgage to Rent process works like this:

  1. Borrower’s mortgage is deemed unsustainable
  2. Borrower qualifies for social housing based on the level of their income
  3. The house is deemed suitable to the borrower’s needs
  4. Borrower surrenders their home to lende
  5. Lender sells the property to an Approved Housing body or other qualifying participant of the Mortgage to Rent Schem
  6. Borrower becomes a tenant of the Approved Housing Body or Local Authority and pays an affordable rent
  7. Borrower retains the right to re-purchase the property in the future

The upshot of Mortgage to Rent is that the borrower remains in their home paying an affordable rent and their tenure is secure. Should their circumstances improve they can re-purchase the property in the future.

For more information on Mortgage to Rent please call the New Beginning team on 01-5240000.