ALC BANK - COVID-19 mortgage supports - Frequently Asked Questions
+ 1. How do I apply for a mortgage payment break?
To request a payment break, or to ask to extend your payment break from 3 months to 6 months, complete the application form online at alcbank.com/paymentbreak, text “mortgage” to 50365 and we’ll send you a link, or call our Customer Relationship Team on 01 611 3333 (lines open 9am to 5:30pm, Monday to Friday). Closing date for applying for your first COVID-19 payment break is 30 September 2020.
+ 2. Can I apply to extend the term (duration) of my mortgage?
Yes. If you have had a 3 month payment break applied to your mortgage loan and wish to apply to extend your mortgage term by 3 months you can do so by completing the Call Back form on our website at alcbank.com/paymentbreak. One of our agents will go through the detail with you over the phone and give you all the information you need.
This option may be suitable for you if you normally pay full capital and interest repayments and you want to keep your regular repayments closer to the level they were before your COVID-19 payment break.
IMPORTANT NOTES ABOUT EXTENDING YOUR MORTGAGE TERM: If you extend the term of your mortgage loan, while your repayments will be closer to the level they were before your COVID-19 payment break, it’s important to understand the implications of this – our agents will be able to explain this to you over the phone – i.e.
- You will end up paying more in interest over the life of your loan;
- The new end date of your mortgage loan may not align with your planned retirement date;
- There could be implications for your life cover and you may need to review it with your life policy provider.
+ 3. Am I eligible for a 3 month payment break or an extended 6 month payment break on my mortgage?
Payment breaks are available to holders of both Private Dwelling Home and Buy-to-Let mortgages who meet the following criteria. However, if you don’t meet these criteria, we may still be able to help you – complete the online application form and one of our agents will call you to discuss your application.
Payment Break criteria
- This is a precautionary1 request (your income hasn’t reduced but you want a safety net) OR it reflects a temporary reduction in your income which has occurred as a result of the current health crisis;
- You were not concerned about your ability to meet your repayments prior to COVID-19;
- You are not in a forbearance arrangement with Bank of Ireland or, if you are, you have met all the terms and conditions for a minimum of 12 months;
- You were not in arrears prior to March 2020 on any mortgage account or other Bank of Ireland loan.
- Your mortgage loan was approved or drawn down prior to 17 March 2020 *1. If you are considering a ‘precautionary’ payment break due to the potential impact of COVID-19, use our calculator at boi.com/paymentbreak to get an indication of what this will mean for your mortgage. Your balance will be higher at the end of the payment break, your subsequent repayments will increase and you will pay more interest, so you should only apply for a payment break if you are satisfied you need one.
Applications are subject to approval. Qualifying criteria and terms and conditions apply*
+ 4. Will taking a payment break mean I end up paying more interest?
Yes. You don’t make capital or interest repayments during a payment break but interest continues to be applied to the loan during it. This means the amount you owe will be higher after the payment break. And because the maturity date doesn’t change, your repayments after the payment break will be higher in order to repay the mortgage by the end of its agreed term (the duration of the loan).
Under question 5, you can see some worked examples showing the implications of a payment break. You can also use the payment break calculator at boi.com/paymentbreak to get an indication of what this will mean for your mortgage loan.
If you feel confident you can afford to make some partial or full mortgage repayments during the payment break period, you should strongly consider doing this. Paying down your loan as soon as you can will reduce the amount of interest you will pay over the life of your mortgage, while options such as extending your payment break or extending the term of your loan will cost you more in interest. Call us on 01 611 3333 to discuss this.
+ 5. What impact will a payment break have on my mortgage balance?
Here are some worked examples based on a mortgage with €100,000 owing, on a rate of 3.0%, and remaining terms between 10 and 30 years.
| TERM REMAINING BEFORE MATURITY | 10 YEARS | 15 YEARS | 20 YEARS | 25 YEARS | 30 YEARS |
|---|---|---|---|---|---|
| Amount owing on the mortgage loan | €100,000 | €100,000 | €100,000 | €100,000 | €100,000 |
| Interest rate | 3% | 3% | 3% | 3% | 3% |
| Current monthly repayments at this rate | €965 | €690 | €554 | €474 | €421 |
| Total amount to repay with no payment break | €115,832 | €124,240 | €133,014 | €142,147 | €151,632 |
| Monthly repayments after a 3 month payment break | €994 | €705 | €564 | €481 | €427 |
| Increase in monthly repayments after a 3 month break | €29 | €15 | €9 | €7 | €5 |
| Total amount to repay with a 3 month payment break | €116,286 | €124,739 | €133,561 | €142,744 | €152,284 |
| Additional interest cost of a 3 month payment break | €455 | €499 | €547 | €598 | €651 |
| Monthly repayments after a 6 month payment break | €1,024 | €720 | €573 | €488 | €432 |
| Increase in monthly repayments after a 6 month break | €59 | €30 | €19 | €14 | €11 |
| Total amount to repay with a 6 month payment break | €116,743 | €125,240 | €134,109 | €143,344 | €152,937 |
| Additional interest cost of a 6 month payment break | €911 | €1,000 | €1,096 | €1,197 | €1,304 |
These are illustrative examples based on a sample rate of 3%. The calculations assume the interest rate will not change for the rest of the mortgage term. (At the end of a fixed rate period customers can choose from rate options available then or roll to the variable rate that will apply at that time. Variable rates can change during the life of a mortgage.) Monthly repayments are based on full capital and interest payments.
A payment break means there will be no direct debit payments from your current account to your mortgage for the period of the break, while we will continue to apply interest to your mortgage during the payment break. The mortgage balance will have increased over the payment break, meaning your monthly instalment at the end of the break will be higher.
In the 20-year example above:
3 month payment break
After a 3 month payment break, the monthly instalment required to pay off the mortgage over the remaining 20 years is €564 which is €9 a month higher than without the payment break (the slight difference is due to rounding to the nearest euro). When the entire 20-year mortgage term is considered, after a 3 month payment break the total amount repayable, originally €133,014, will increase by €547 to €133,561. 6 month payment break
After a 6 month payment break, the monthly instalment required to pay off the mortgage over the remaining 20 years would be €573 which is €19 a month higher than without the payment break. When the entire 20-year mortgage term is considered, after a 6 month payment break the total amount repayable, originally €133,014, will increase by €1,096 to €134,109.