The Government recently announed a plan to help struggling home owners to get their mortgages split with half of the amount to be frozen while repaying the other half.
Part of the loan will effectively be “frozen” and put to one side, meaning no repayments and no interest for an indefinite period. This would mean monthly repayments are only made on the active portion. It would dramatically reduce monthly outgoings for cash-strapped families and give them breathing space — which the banks hope would allow them to repay the rest of the loan when their finances improve.
Bank of Ireland, ICS, Allied Irish Bank, EBS and Permanent TSB are giving this serious consideration and will only offer deals to those distressed mortgage holders they consider to have good prospects of getting back to financial health.
The maximum amount of time that a mortgage would be split is likely to be 20 years, with most likely the bank charging a low interest rate on the frozen rate.
Repayment on the “Frozen Mortgage” could happen if the home owner,
– gets back on their feet financially.
– Retires and gets a lump sum from their pensions.
– Sells the house at some stage and downsizes to a smaller house.
– Dies and the house is sold.
– The children in the house start earning and help pay off the shelved portion.
It is planned to be reviewed on a three year basis, and if circumstances improve for the home owner, the frozen part of the mortgage could be re-added on to the mortgage. If the house owner was having difficulty repaying the new arrangement, then voluntary surrender of the home could be initiated. In the worst case situation, the remainder of the load would need to be repaid by the sale of the property after the death of the home owner. Pat Sutton, Partner O’Kelly Sutton, Kildare. www.okellysuttoncrosby.com