Download full Central Bank Code of Conduct on Mortgage Arrears, December 2010.

Mortgage arrears

Redundancy, illness, divorce or separation can have a devastating impact on your finances and can be extremely stressful.

If you have difficulty repaying your mortgage you run the risk of losing your home. However, strict rules ban banks from seeking repossession for one year after mortgage arrears first started incurring.

What to do if you think you’re going to fall behind?

• Check your mortgage protection plan and your life insurance policy – will they cover illness or change-of-work situation?

• Contact your bank and discuss your options

• Know your rights

What the banks cannot do


A new provision in a legally binding code of pratice prevents banks from imposing arrears charges or extra interest on people who are in arrears, but are co-operating with the new Mortgage Arrears Resolution Process (MARP) with effect from January 1.

The MARP is a framework which must be developed by all lenders to handle cases where home-owners are struggling with repayments.

The Central Bank says the changes to the Code of Conduct on Mortgage Arrears have been made following the recommendations of a Government expert group. The code will apply to mortgage lenders from January 1.

Can the banks repossess a home as soon as I default?

The Financial Regulator has banned mortgage lenders from taking legal action against borrowers in arrears for 12 months after the householders have missed their first repayments. With more and more people in danger of going into arrears, the regulator is now looking at ways of giving those in difficulties even more breathing space.

In August 2010, the financial regulator sought to tighten the rules further in proposals due to be confirmed in November. Under the revised proposals, the 12-month period would not kick in if a borrower has agreed a revised payment plan with the lender. Only 12 months after that revised plan is first breached can a lender pursue the home-owner.

In addition, lenders could not seek repossession if their customers had lodged a complaint or appeal with the Financial Services Ombudsman, even if it took longer than 12 months to resolve.

Under the Financial Regulator’s Code, your lender must explore alternative payment measures with you. These may include reducing the monthly repayment, payment breaks, or extending the term of your loan. This will make your loan more expensive over the long term, but it will make things more manageable for you in the short term. Contact your lender and find out what options are open to you.

[Note: This mortgage arrears code only applies to mortgages on your primary residence, not to mortgages on holiday homes or investment properties]

Lenders must explore all viable options with borrowers and must examine alternative repayment measures. Borrowers will be asked to submit a summary of their financial situation outlining their assets, liabilities, outgoings and income. This is called a statement of financial affairs.

Useful links

December 6, 2010: New Code of Conduct on Mortgage Arrears

December 6, 2010: Download full Central Bank Code of Conduct on Mortgage Arrears

November 1, 2010: Free legal aid for those facing repossession (Nine News)

September 1, 2010: New figures show arrears rising