Plan could slash repayments by half for years
'SEAN and Mary' took out a mortgage with their bank some years ago, but since Sean lost his job as an office administrator they have struggled to pay their bills.
They owe €200,000 on their mortgage, but are in arrears. The couple, who have two children, fear they will lose their home. Sean is getting some work at the moment, helping out in a small firm run by a friend. But they are still finding it difficult to meet the monthly repayments of €840 on their mortgage plus other bills.
They could cope if they had some of their total loan "warehoused".
If the mortgage was split and half of it was frozen, with no interest accruing on the frozen part, they would be making repayments on just €100,000.
The monthly repayments would fall to €419 -- half the original amount.
The couple would take up this deal and hope that in five years Sean would be back earning enough to have the frozen part of the mortgage added back in.
Sean and Mary could then return to making repayments on the full amount.
This means that although the bank takes a hit on some of the interest while the loan is "frozen" it can still anticipate full repayment of the loan eventually.