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What is a Mortgage Payment Break?

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A Mortgage Payment Break allows you to take a break from paying your mortgage for an agreed period of time. This means that your 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. While there are no upfront costs associated with the payment break, this will have an impact on your Cost of Credit which is the total amount of money that you are charged when borrowing from Ulster Bank.

Can I still apply for a COVID-19 Mortgage Payment Break?

No. You could apply for a mortgage payment break up until the 30th of September 2020. This deadline has now passed. If you have not availed of a payment break and are now in financial difficulty we have supports in place to help you.

To find out more about the options available please visit our website. (opens in a new window)

Why can I no longer apply for a COVID-19 Mortgage payment break?

The deadline to apply for an initial mortgage payment break of 30th September 2020 was set by the European Banking Authority (EBA) for lenders to process and grant an initial Mortgage Payment Break of three months to customers.

I am coming to the end of my first payment break, what are my options?

Once your initial Mortgage Payment Break expires after three months, you can apply for a Mortgage Payment Break Extension of a further 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
  • If you have more than one mortgage account and need a payment break on all of them, then you must apply for a Mortgage Payment Break Extension for each mortgage account
  • You have received your letter outlining the different options available to you; this will be issued to you prior to your initial Payment Break expiry date.
  • Initial Mortgage Payment break should be applied before 30th September.

Will a COVID-19 payment break affect my Credit Rating?

No, your credit rating will not be impacted whilst you are availing of a COVID-19 mortgage payment break. 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 COVID-19 Mortgage Payment Break early?

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

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 monthly payments that are suspended during my COVID-19 Mortgage Payment Break?

When you receive a Mortgage Payment Break, you do not have to pay your monthly mortgage repayments for an agreed period of time. Your suspended monthly repayments will need to be repaid at a later date as well as any interest that accumulated during your Mortgage Payment Break.

Once your initial Mortgage Payment Break or subsequent Mortgage Payment Break Extension expires, you will be provided with two options to repay the monthly repayments that were suspended during your Mortgage Payment Break as well as any interest that accumulated:

  • Spread the cost of the suspended repayments over your remaining term
  • Extend the term of your mortgage by an additional three months or six months, depending on the length of your COVID-19 Mortgage Payment Break.

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

Yes. If you can afford to pay something towards 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 1800 435 763. The payments you make will reduce the arrears on your mortgage and that also reduces the total amount you owe on your mortgage.</p>

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).

If I make any partial payments during my COVID-19 Mortgage Payment Break how will my Cost of Credit be impacted?

If you are able to make any payments to your mortgage during your Payment Break, this will result in a reduced balance and a lower cost of credit, compared to not making any payments whilst in the Payment Break. The following illustrations show a number of mortgage scenarios and how a one-off payment or multiple payments to your mortgage during your payment break can impact the cost of credit on your mortgage.

Mortgage Payment Break Example 1 (opens in a new window)

Mortgage Payment Break Example 2 (opens in a new window)

Mortgage Payment Break Example 3 (opens in a new window)

Mortgage Payment Break Example 4 (opens in a new window)

Mortgage Payment Break Example 5 (opens in a new window)

Mortgage Payment Break Example 6 (opens in a new window)

It may be possible for you to consider switching mortgage products to avail of any of our alternative interest rate options while you are on a Payment Break or while you are in arrears. You may be able to save some money if there is a lower interest rate than the one you are paying. You can find these on our website at Manage my Mortgage (opens in a new window). Please note that you will need to enter your mortgage account number, date of birth and surname into the required fields. N.B. If you request to end a fixed rate period early, you may incur a breakage charge.

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.

However, if this 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 COVID-19 Mortgage Payment Break?

No, the bank doesn’t apply any additional charges if you avail of a Mortgage Payment Break, however the total amount of interest that accumulates on your account over the life of your mortgage will be higher if you take a mortgage payment break, compared to if you hadn’t taken a payment 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 Mortgage Payment Break.

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

When monthly mortgage repayments are suspended for a period of time, interest continues to accrue. This results in a mortgage balance that is higher at the end of a Mortgage Payment Break than it would have been if monthly repayments were continued without a Mortgage Payment Break.

As the mortgage balance will be higher, so will the ‘Cost of Credit’. Because interest is charged on the total mortgage balance, the interest cost will be higher each month after your Mortgage 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.

If you apply for a Payment Break Extension and avail of a six month break in total, before this payment break expires we will send you a letter which includes details of the cost of credit applicable to you depending on the choice you make.

Here are some illustrative examples which will help you understand how much cost of credit can increase after a Payment Break. The illustrated examples below will help you make a decision on which of the two options available to repay the payments suspended during your first payment break and so will show the cost of the credit impact if you choose to:

  • Spread the payments suspended over the remaining term of your mortgage or
  • Extend the term of your mortgage by three 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 higher 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

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.

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

There is little variance in the monthly repayments due if the term was extended due to the longer term remaining.

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 which is higher 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 1800 435 763. The payments you make will reduce the arrears on your mortgage and that also reduces the total amount you owe on your mortgage.

What will happen if I don’t start making repayments again after an extended COVID-19 mortgage payment break?

We are here to help if you find you cannot make your normal repayments at the end of your payment break. You can find more information on how we can support you here Struggling Financially (opens in a new window)

It is important that you start making repayments towards your loan as soon as you are able to do so. Not making full repayments can lead to:

  • Your mortgage being classified as pre-arrears or arrears - this means your income and expenditure will need to be assessed to determine how much you can pay towards your mortgage and for how long an alternative repayment arrangement should be in place. Rest assured we will work with you on a range of solutions that will help you get back on track if this is the case.
  • Your credit record being impacted - lenders are required by law to report all outstanding mortgages / to the Central Credit Register (CCR). If you are in arrears, your credit record with the Irish Credit Bureau (ICB), the Central Credit Register (CCR) or any other credit reference agency will continue to show the number of payments missed until the arrears are repaid. Your credit rating will remain on record with the ICB for a period of up to seven years. Your information on the CCR will be held for a period of five years after the account has been fully repaid. It is important to be aware that arrears may adversely affect your credit rating with licensed credit reference agencies and may limit your ability to access credit and loans in the future.

If my situation hasn’t improved during or by the end of the extended COVID-19 Mortgage Payment Break, what should I do?

If your situation hasn’t improved, because of direct or indirect impacts of COVID-19, and you don’t feel you can return to making full repayments on your mortgage, you should:

  • Contact us as soon as possible - in this way, we may be able to identify a solution for you. Don’t ignore the problem - that’s the worst thing you can do.
  • Look at your financial situation - we will provide you with a Standard Financial Statement (SFS) to help you do this.
  • Always respond to communications from us - we are willing to engage with you to see if a solution can be found for the problem you have making repayments on your mortgage.

If you need further support, please log on to the Struggling Financially (opens in a new window) page 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) – Tel 1800 435 763. Please note calls are recorded for training and monitoring purposes.

If you fall behind on your mortgage repayments or if you tell us that you are at risk of falling behind on your mortgage repayments, we are required to follow the rules of the Central Bank of Ireland’s Code of Conduct on Mortgage Arrears (CCMA), including the Mortgage Arrears Resolution Process which is set out in the CCMA.

What is the Mortgage Arrears Resolution Process and what does it involve?

The Mortgage Arrears Resolution Process or MARP is a four-step process requiring:

  • Communication with the borrower - the MARP sets out how we should contact you and what information we should give you if you find you are unable to make repayments on your mortgage.
  • Seeking financial information from the borrower - it also sets out what information we will need from you to look at your financial situation and to understand what repayments you can make towards your mortgage. As part of this process, you will be asked to complete an SFS, as mentioned above. This will inform us of your financial situation.
  • Assessment - the information provided to us in the SFS will allow us to assess what alternative options are available to allow you to make some repayments on your mortgage.
  • Resolution - Depending on your individual circumstances, your mortgage may be restructured into an Alternative Repayment Arrangement (ARA), which will mean revised repayments on your mortgage for an agreed length of time.

We will engage with you to discuss and explain what all of this means for you.