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What is a Mortgage Payment Break?

A Mortgage Payment Break allows you to take a break from paying your mortgage for an agreed period of time. These monthly repayments are suspended and have to be repaid at a later date.

If you are applying for a Mortgage Payment Break due to your income being affected by COVID-19, this will not have a negative impact on your credit rating. This will have an impact on your Cost of Credit which is the total amount of money that you are charged when borrowing from a credit provider.

Can I apply for a Mortgage Payment Break?

You can apply for a three month Mortgage Payment Break if:

  • Your ability to pay your mortgage has been affected by COVID-19
  • You have consent from everyone named on the mortgage
  • You have drawn down your mortgage before 16th March 2020
  • If you have more than one mortgage then you must apply for a payment break for each mortgage

If I have already applied for a Mortgage Payment Break can I apply for an Extension?

Yes, you can apply for a Mortgage Payment Break extension for another three months (total six months) if:

  • Your ability to pay your mortgage has been affected by COVID-19
  • You have consent from everyone named on the mortgage
  • You have drawn down your mortgage before 16th March 2020
  • If you have more than one mortgage then you must apply for a payment break for each mortgage

Will a payment break affect my Credit Rating?

No, whilst you are availing of a payment break due to COVID-19, your credit rating will not be adversely affected. If you wish, you may also opt to place an explanatory statement on your credit report to explain your current circumstances where your loans are concerned.

More information is available from the Central Credit Register (opens in a new window).

How do I cancel my Payment Break early?

If you decide that you no longer need your Payment Break and can afford to make your full monthly repayments, then you can cancel your Payment Break early by emailing us at UlsterBankROIMortgages@rbs.co.uk advising that you would like to return to your normal repayments.

If your account is in arrears and you wish to cancel your Payment Break please visit our struggling financially page (opens in a new window).

What happens to the payments that are suspended during the Payment Break?

As part of the measures to help you during this unprecedented time we are putting in place a process to allow you to apply for a Mortgage Payment Break for an initial period of 3 months with the option to apply for a 3 month extension should you require it.

When you receive a Mortgage Payment Break, you do not have to pay your monthly mortgage payment for the agreed period. These payments are suspended for the period of the Payment Break and you will be offered two options at the end of your Payment Break:

  • 1A - you can increase your monthly mortgage payment and pay an extra amount each month over the remainder of your mortgage term
  • 1B - you can extend the term of your mortgage by an additional three months

Can I make a payment to my mortgage while I’m on a Payment Break?

Yes. If you can afford to pay something off your mortgage you can choose to pay whatever you can afford.

Any amount that you can afford to pay towards your mortgage will help reduce the total amount of interest that you are charged each month as it will reduce the total amount you owe on your mortgage. The term of your mortgage will not change because of any additional payments you make.

If you are not currently in arrears and if you have either an Ulster Bank current or savings account, you can make a payment by visiting our Manage your Mortgage page (opens in a new window). It will also provide information on how to contact us if you wish to make a payment from a current or savings accounts held with an alternative financial provider.

If you are in arrears you can make a payment by calling us on 01 903 6833. The payments you make will reduce the arrears on your mortgage and that also reduces the total amount you owe on your mortgage.

If you have a fixed rate and repay your mortgage early, or make an overpayment that’s more than your overpayment allowance, an early repayment charge may be payable. You can find out more using our mortgage overpayment tool (opens in a new window).

Do I need to cancel my direct debit while I am on the Mortgage Payment Break?

No, you do not need to cancel your direct debit. We will change your direct debit amount to zero for the duration of your Payment Break.

Please note that depending on when we agree a new repayment amount, it may be too close to your next payment date and your direct debit may not be amended in time. That can happen whether we are reducing your repayment amount or increasing it.

However, if that happens we will issue a refund back to your account within 14 days.

What should I do if I have already cancelled my direct debit?

If you have already cancelled your direct debit you should set this back up now so you don’t risk missing any payments once your payment break expires.

If you set your direct debit back up while you are on your Payment Break, we will change your direct debit amount to zero for the duration of your Payment Break.

You can do so by visiting our Manage your Mortgage page (opens in a new window).

To setup your direct debit you will need the following details:

  • Mortgage account number
  • Date of Birth
  • Surname
  • BIC and IBAN for current account where direct debt will be setup from

Will I be charged for taking a Payment Break?

No, the bank doesn’t apply any charges if you avail of a Payment Break.

The total amount of interest that accumulates on your account over the life of your mortgage will be higher if you take a payment break than if you hadn’t taken a break. This is called the ‘Cost of Credit’.

What is Cost of Credit?

‘Cost of Credit’ is the total amount of money that you are charged when borrowing from a credit provider. For mortgages, this is the additional amount, over and above the amount borrowed, that you have agreed to repay. This includes interest and fees and charges over the life of the loan.

There is no fee or charge when you take a Payment Break.

Why is the Cost of Credit higher if I take a Payment Break?

Because your monthly repayments have been suspended for three months, the balance of your mortgage is higher at the end of your Payment Break than it would have been if you had continued to make your monthly repayments without a Payment Break.

Therefore, as your mortgage balance will be higher so will the ‘Cost of Credit’. As interest is charged on your total mortgage balance, the monthly interest cost will be higher after your Payment Break.

How do I know how much higher the Cost of Credit is because of this Payment Break?

The initial ‘Cost of Credit’ is calculated when you first take out your mortgage and this amount is detailed within your original loan agreement.

However, the Cost of Credit can change over the life of your mortgage any time an adjustment is made to your mortgage. For example, adjustments such as moving to a higher or lower interest rate will change the cost of credit over the life of your mortgage. Taking a payment break, missing a payment or increasing the term of your mortgage can increase your cost of credit. Whilst making a higher monthly repayment, paying a lump sum to your mortgage or decreasing the term of your mortgage can decrease your cost of credit.

Here are some illustrative examples which will help you understand how much cost of credit can increase after a Payment Break. These examples also illustrate how your decision on whether to increase your monthly mortgage payment and pay an extra amount each month over the remainder of your mortgage or whether you extend the term of your mortgage and pay for an additional 3 or 6 months.

Example 1

Outstanding mortgage balance is €150,000. At the point of the three month Payment Break starting, there are 20 years remaining and a Standard Variable Rate of 4.3% is in place.

Example for Illustrative Purposes Only
Amount Owed € 150,000
Standard Variable Interest Rate 4.30%
Monthly Repayment before the Payment Break € 933
Remaining Mortgage Term before the Payment Break 20 Years
Option 1(A) – Spread the three months of suspended payments over the remaining term Option 1(B) – Extend the mortgage term by three months
N.B. this option requires an extra 3 payments when compared to option 1 (A)
New Remaining Mortgage Term 19 years 9 months New Remaining Mortgage Term 20 years
New Monthly Repayment € 950 New Monthly Repayment € 943
New Total Cost of Credit € 75,260 New Total Cost of Credit € 76,301
Increase in Cost of Credit € 1,374 Increase in Cost of Credit € 2,415

You can see the difference that the three month Payment Break makes compared to if you hadn’t requested the Payment Break.

You can also see from the table above that the increase in the ‘cost of credit’ is more if you wait until the end of your mortgage to make up the three suspended payments.

Example 2

Outstanding mortgage balance is €60,000. At the point of the three month Payment Break starting, there are 5 years remaining and a Loyalty Discounted Variable Interest Rate of 3.1% is in place.

Example for Illustrative Purposes Only
Amount Owed € 60,000
Standard Variable Interest Rate 3.10%
Monthly Repayment before the Payment Break € 1081
Remaining Mortgage Term before the Payment Break 5 Years
Option 1(A) – Spread the three months of suspended payments over the remaining term Option 1(B) – Extend the mortgage term by three months
N.B. this option requires an extra 3 payments when compared to option 1 (A)
New Remaining Mortgage Term 4 years 9 months New Remaining Mortgage Term 5 years
New Monthly Repayment € 1,142 New Monthly Repayment € 1,089
New Total Cost of Credit € 5,105 New Total Cost of Credit € 5,351
Increase in Cost of Credit € 258 Increase in Cost of Credit € 504

This example shows that the increase to the monthly repayment is relatively greater than the increase in the first example if you choose Option 1(A) when there is a short term remaining on your mortgage in this second example.

However, the increase in the ‘Cost of Credit’ is relatively lower in this second example because you are paying interest for a shorter period as the remaining term is less.

Example 3

Outstanding mortgage balance is €150,000. At the point of the three month Payment Break starting, there are 5 years remaining and a Variable Tracker Interest Rate of 1.15% is in place.

Example for Illustrative Purposes Only
Amount Owed € 150,000
Variable Tracker Interest Rate 1.15%
Monthly Repayment before the Payment Break € 1,324
Remaining Mortgage Term before the Payment Break 10 Years
Option 1(A) – Spread the three months of suspended payments over the remaining term Option 1(B) – Extend the mortgage term by three months
N.B. this option requires an extra 3 payments when compared to option 1 (A)
New Remaining Mortgage Term 9 years 9 months New Remaining Mortgage Term 10 years
New Monthly Repayment € 1,360 New Monthly Repayment € 1,328
New Total Cost of Credit € 9,094 New Total Cost of Credit € 9,319
Increase in Cost of Credit € 232 Increase in Cost of Credit € 457

You can see that when the term is extended the monthly repayments will be lower than if the suspended repayments are spread out over the remaining term. However, the overall cost of credit will be higher as the suspended repayments are repaid over a longer period of time.

Example 4

Outstanding mortgage balance is €150,000. At the point of the three month Payment Break starting, there are 10 years remaining and a Standard Variable Interest Rate of 4.3% is in place.

Example for Illustrative Purposes Only
Amount Owed € 150,000
Standard Variable Interest Rate 4.30%
Monthly Repayment before the Payment Break € 1,540
Remaining Mortgage Term before the Payment Break 10 Years
Option 1(A) – Spread the three months of suspended payments over the remaining term Option 1(B) – Extend the mortgage term by three months
N.B. this option requires an extra 3 payments when compared to option 1 (A)
New Remaining Mortgage Term 9 years 9 months New Remaining Mortgage Term 10 years
New Monthly Repayment € 1,589 New Monthly Repayment € 1,557
New Total Cost of Credit € 35,884 New Total Cost of Credit € 36,812
Increase in Cost of Credit € 1,065 Increase in Cost of Credit € 1,993

You can see from the table above that the increase in the ‘cost of credit’ is more if you wait until the end of your mortgage to make up the three suspended payments. You can also see the difference in repayments compared to Example 3 as this is on a higher interest rate.

Example 5

Outstanding mortgage balance is €250,000. At the point of the three month Payment Break starting, there are 20 years remaining and a Variable Tracker Interest Rate of 1.15% is in place.

Example for Illustrative Purposes Only
Amount Owed € 250,000
Variable Tracker Interest Rate 1.15%
Monthly Repayment before the Payment Break € 1,167
Remaining Mortgage Term before the Payment Break 20 Years
Option 1(A) – Spread the three months of suspended payments over the remaining term Option 1(B) – Extend the mortgage term by three months
N.B. this option requires an extra 3 payments when compared to option 1 (A)
New Remaining Mortgage Term 19 years 9 months New Remaining Mortgage Term 20 years
New Monthly Repayment € 1,183 New Monthly Repayment € 1,170
New Total Cost of Credit € 30,338 New Total Cost of Credit € 30,776
Increase in Cost of Credit € 418 Increase in Cost of Credit € 806

As you can see in this example, the overall cost of credit is relatively high as this example has a larger balance to be repaid over a longer term compared to the illustration in Example 4.

Example 6

Outstanding mortgage balance is €150,000. At the point of the three month Payment Break starting, there are 20 years remaining and a Fixed Interest Rate of 2.6% is in place.

Example for Illustrative Purposes Only
Amount Owed € 150,000
Fixed Interest Rate 2.60%
Monthly Repayment before the Payment Break € 802
Remaining Mortgage Term before the Payment Break 20 Years
Option 1(A) – Spread the three months of suspended payments over the remaining term Option 1(B) – Extend the mortgage term by three months
N.B. this option requires an extra 3 payments when compared to option 1 (A)
New Remaining Mortgage Term 19 years 9 months New Remaining Mortgage Term 20 years
New Monthly Repayment € 815 New Monthly Repayment € 807
New Total Cost of Credit € 43,202 New Total Cost of Credit € 43,778
Increase in Cost of Credit € 679 Increase in Cost of Credit € 1,255

As you can see there is little variance in the monthly repayments due if the term was extended due to the longer term remaining.

You can also see there is an increase in the cost of credit between spreading the suspended repayments over the remaining term and extending the term. This is due to the suspended repayments being repaid over a longer term.

Can I make a lump sum payment to my mortgage while on a Payment Break?

Yes, you can make a lump sum payment at any time to your mortgage.

However, if you have a fixed rate and repay your mortgage early, or make an overpayment that’s more than your overpayment allowance, an early repayment charge may be payable.

For further information on overpayment options and to estimate what effect a lump sum repayment will have on your monthly mortgage repayments. Please see our mortgage overpayment tool (opens in a new window).

If you are not currently in arrears and if you have either an Ulster Bank current or savings account, you can make that payment by visiting our Manage your Mortgage page (opens in a new window). It will also provide information on how to contact us if you wish to make a lump sum payment from a current or savings accounts held with an alternative financial provider.

If you are in arrears you can make a lump sum payment by calling us on 01 903 6833. The payments you make will reduce the arrears on your mortgage and that also reduces the total amount you owe on your mortgage.

If I am currently on a Payment Break and have now been made redundant what do I need to do?

If you think you may have difficulty repaying your mortgage at the end of your Payment Break, please let us know, we’re here to help. The earlier you tell us about your current situation will enable us to offer you a number of alternative options.

We will ask you to complete a Standard Financial Statement (SFS). We can email you a personalised link to do this. We will also ask you to provide some supporting documents to verify your Income and Expenditure.

If you need further support, please visit our struggling financially page (opens in a new window) where you can leave your details with us and we will email you your personalised link to the Standard Financial Statement and arrange a call back.

Ulster Bank has an Arrears Support Unit, which is currently open from Monday to Friday, 9am to 5pm (excluding Bank Holidays). Please note calls are recorded for training and monitoring purposes.