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Ireland responds to mortgage arrears crisis


Last week, AIB became the first Irish bank to launch an enhanced mortgage-to-rent scheme following a move by the Irish Government this year to modify a previous plan that has had limited take-up in recent years. AIB is working with a debtors’ advocate, David Hall’s Irish Mortgage Holders Organisation, and the new iCare Housing Company.

The new initiative has been set up to help keep people who have fallen into arrears on their mortgage - and who qualify for social housing - in their own homes. Under the scheme AIB will give iCare €100 million to buy properties, which will be rented back to families who forfeit ownership of the homes, in return for a long-term lease.

Under the terms of the initiative, homeowners can buy back their home at the discounted price paid by iCare Housing if their circumstances improve which is an added incentive for homeowners.

There are some criteria for qualification, including a cap on property value and income levels however David Hall, chief executive of the Irish Mortgage Holders Organisation and iCare, said it was a sensible, practical solution to the current housing crisis. It is also the first move aimed at preventing vulture funds acquiring more Irish assets.

Whether a similar scheme will travel north and across the water to the U.K is uncertain therefore it is imperative that you start to act now to find a solution to your mortgage arrears.

What can I do now to help ease the burden of mortgage arrears?
Use your personal budget to work out if you can afford your normal mortgage payment, and what you can afford towards the arrears.

Lenders will sometimes ask you to pay off the arrears over 12 to 24 months. Ask for longer if you cannot afford to do this. Start paying what you can afford anyway, and explain your reasons for not being able to pay more.

Most mortgages are spread over a number of years. This is called the mortgage term. If you have already lived in your home for several years, you could ask your lender to extend the term back to the original term, or even longer.

If you have a repayment mortgage, you could ask your lender to accept a monthly payment which covers only the interest part of your normal monthly payment. This will probably have to be a temporary arrangement. If you already have arrears, it is likely your lender will also expect you to pay something towards them each month.

You could add the arrears to your mortgage. This is called ‘capitalising’ the arrears, however, normally you can only do this on first mortgage arrears, and usually only if the value of your home is a lot more than the mortgage.

ASK FOR HELP - Try not to wait any longer, if you have a mortgage arrears issue then simply ASK FOR HELP NOW.

What we can do to help?
Since 2010, GDP Equity Experts have helped 100’s of families deal with debt related issues and in particular mortgage arrears related issues.  We would be very concerned at this point as we know that approximately 88,000 households across the UK are currently living with mortgage arrears and many are struggling month to month. 

As a result, it is very important to take advice in this regard from a regulated team of debt advisors to plan for the future.

One of the aims of our business is to educate people around money and finance.  With the economy facing a number of headwinds over the next few months, the time to address any issues like this is now.  If you need some help with this, one of our team in our Belfast or Manchester office would be delighted to assist.

Mortgage arrears and negative equity are often issues that come up together.  If you would like to download a copy of our 7 step guide to our ebook, then please hit the button below. 

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