Borrowers on payment breaks will pay up to €4,500 extra on mortgages
Borrowers who have availed of a payment break on their home loan during the Covid-19 crisis can expect to pay up to €4,500 in additional costs on their mortgages, an Oireachtas committee has been told.
This emerges from correspondence this month from four of the main retail banks – AIB, Bank of Ireland, Permanent TSB and Ulster Bank – to the Oireachtas Special Committee on Covid-19 Response.
In a letter dated July 21st, Ulster Bank told the committee that a borrower with a balance of €250,000, an interest rate of 2.5 per cent and 30 years left on their mortgage would pay an additional €4,468 by extending the term of their loan by the maximum six months allowed. This reduces to € 2,502 if the borrower pays off the balance over the normal term of the loan.
Ulster Bank has agreed 12,000 mortgage payment breaks since March. “A payment break allows for monthly repayments of capital and interest to be temporarily deferred/suspended for an agreed period of time (initially up to three months) without any negative impact on the borrower’s credit rating,” Ulster Bank chief executive Jane Howard said.
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