Banking Code On Personal Mortgages

The Central Bank has revised the code by which Commercial Banks deal with mortgages that are in arrears. The original code which was brought in in 2009 due to pressue from people who were in arrears.

The regulator Matthew Elderfield had made proposals earlier this year to the Banks, which would give more protection to people who were at risk of losing their homes.

The new rules means that the Banks will not be able to able to take legal action to repossess a home, if the mortgage
holder is in contact and co-operating with the Bank.

The new code makes a number of options available to the person in arrears:

  • a payment holiday
  • an option to pay the interest only
  • to extend the term of the mortgage
  • to pay the interest and some of the capital
  • a change in the type of the mortgage, perhaps from a fixed to a variable rate and adding the arrears to the capital,
  • deferring some of the interest payments.


The new code will not allow lenders to impose a penalty charge on the person in arrears if the homeowner agrees a revised repayment plan with the Bank.

A lender will be able to reposses a home if the person in arrears fails to co-operate with the bank or if the mortgage becomes unsustainable, i.e. too much interest has been built up and cannot be cleared.

The new code comes into effect on the 1st January 2011.

There are reported to be 40,000 mortgages in arrears in the country and another 30,000 who have rescheduled their repayments.

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