How are Pepper supporting Customers?
As many of our Customers deal with the challenges of COVID-19, we firstly want to make sure you have all the information you need to help you understand the options that may be available to you where you availed of a Payment Break.
The deadline of 30 September 2020 that was set by the European Banking Authority (EBA) for lenders to issue Payment Breaks has now passed, however, to support Customers who are impacted by COVID-19, we have a number of potential solutions, depending on your individual circumstances. Please contact us without delay to discuss longer term solutions that may be available to you.
We will work with you to agree the best solution for you.
What is a Payment Break?
A Payment Break is the deferral of or reduction in Loan repayments for Mortgages (for private dwellings and buy-to-lets) and Commercial Loans, for up to three months with the potential of extending for a further three months depending on your individual circumstances and requirements. Please note there are no fees associated with a Payment Break, however interest will continue to accrue.
Payment Breaks can take several different forms depending on what best suits your specific situation.
Below we have outlined two of these options.
Deferred Payments (Payment Break) – this means that: -
- Your full Loan repayments (e.g. monthly payments) are deferred for an agreed period, so you do not make any capital or interest payments during this time;
- Your outstanding Loan balance will not reduce during this period;
- Interest will continue to accrue and be applied to your Loan during the Payment Break based on the current interest rate and in accordance with the existing terms and conditions of your Loan agreement;
See more information on how a Payment Break operates below.
Reduced Payments (Payment Break) – this means that: -
- You only pay the interest, or a reduced monthly capital and interest payment, on the Loan during the agreed Reduced Payment period.
- For interest only payments, your outstanding Loan balance will not reduce during this period. For reduced capital and interest payments, your outstanding Principal Loan balance will reduce by the payments made during this period.
- Interest will continue to accrue and be applied to your Loan during the Reduced Payment break based on the current interest rate and in accordance with the existing terms and conditions of your Loan agreement.
See more information on how a Payment Break operates below.
How does a Payment Break operate?
A Payment Break effectively gives you breathing space
- A period during which you do not have to make repayments on your Loan.
- Where you have the capacity to do so, another option is to only pay the interest on the Loan, or make reduced monthly payments, as it falls due during the Payment Break.
- Interest will continue to accrue and be applied to your Loan during the Payment Break based on the current interest rate and in accordance with the existing terms and conditions of your Loan agreement.
If you were offered a Payment Break, we will;
Spread your deferred Loan repayments over the remaining term of your Loan, so that your Loan is repaid within the original term. This will result in an increase to the Cost of Credit* on your Loan. This means that when your repayments start again, the Loan repayment will be somewhat higher as Pepper will add the deferred Loan repayments to your overall Loan balance, to be repaid within the original term. The shorter the term left on your Loan or mortgage, the larger the increase will be on your Loan repayments, when the Payment Break is over.
*Cost of Credit: The Cost of credit is the total interest cost for the loan. If you avail of a Payment Break or reduced payment period, then the balance will not reduce at the same rate over this period. As such when the Payment Break or reduced payment period ends, the balance will be higher than it would have been, and the interest based on this balance will result in an increase in the cost of credit for the Loan.
What are my options at the end of the Payment Break?
Please Note, if at any stage during the Payment Break you are concerned about being able to return to full repayments, you should contact us as soon as possible.
If you have already availed of a Payment Break, Pepper will be in contact with you prior to the Payment Break ending, to outline the following options that may be available to you.
Your circumstances have improved;
The Loan repayments will resume (e.g. full capital and interest payments) and your Loan repayments will increase to ensure that the Loan is fully repaid within the original term of the Loan. For Interest Only loans, you will resume your Interest Only repayments and the Capital balance will be payable in full at the end of the loan or mortgage term.
It is important that you return to making full repayments once you can do so, as this would make the Loan less costly for you in the longer term.
Where you can resume Loan repayments but may not be able to meet the increased Loan repayments mentioned above, the term of the Loan may be extended by the length of the Payment Break. Loan repayments will increase slightly over the new term of the Loan. We would encourage you to make the increased Loan repayments within the original term of the Loan where possible, as extending the term will be more expensive in the long term, as interest is payable on the principal balance over a longer period. In addition, your life assurance may need to be extended to cover the extended term of your mortgage. Please note this option may not be available for some products types.
Your circumstances have not improved:
If you continue to be impacted by COVID-19 and you believe it to be short term, you can apply to have the Payment Break extended for a further three months. You may defer payments, or you may be able to afford “interest only” payments or “part capital and interest”. It is important that you consider this option and make some repayment if you can afford to, as it means you will have a lower overall balance when the Payment Break ends; and the overall cost of credit* on your Loan, will be lower, than if you defer all payments for a further 3 months.
Pepper will be in contact with you prior to the extended Payment Break ending to discuss your options, however, if at any time you are concerned about being able to meet your payment obligations when the extended Payment Break ends, please contact us without delay to discuss long term solutions that may be available to you.
If you continue to be impacted by COVID-19 but you are concerned about being able to return to full repayments in the long term, you should contact us as soon as possible. There are options available to you and we will work with you to agree the best solution for you, considering your individual circumstances.
What do I do if I am concerned about making my Loan or Mortgage payments?
Links to contact numbers: Residential Mortgages | Commercial Mortgages
What if my Loan was in arrears prior to COVID-19?
We are committed to supporting all Customers – including those Customers who were financially distressed prior to COVID-19.
To do this, we will need to understand your individual situation to be able to consider your circumstances and discuss your options. If your financial difficulties are longer term in nature, we may need to look at a more permanent solution to address your financial difficulties.
This may include asking you to provide information on:
- The reasons why you are experiencing financial difficulties
- An explanation of how and when you expect your situation will improve
- Whether you can make any repayments to your Loan and over what period.
If you have a mortgage on your private dwelling: you may be required to complete a Standard Financial Statement (SFS) which sets out your income and expenses, as well as providing relevant supporting documents. We can help you complete the SFS over the phone to ensure this is as seamless and easy as possible.
If you have a mortgage on a Buy to Let: you may be required to complete an Income and Expenditure form which sets out your income and expenses, as well as providing relevant supporting documents.
If you have a Commercial Loan: you may be required to complete a Statement of Affairs, as well as providing relevant supporting documents.
You or your appointed adviser should contact us to discuss the options available to you to resolve the arrears.
Link to Mortgage Arrears Resolution Booklet:
Link to Information Booklet for Small and Medium-Sized Enterprises (SME’s) in Financial Difficulties:
Independent Advice: You may prefer to seek independent advice from your financial advisor or from MABS (the Money Advice and Budgeting Service). MABS is a national, free, confidential and independent advice service for people in debt difficulties or in danger of getting into debt difficulties. The MABS Guide to the Code of Conduct on Mortgage Arrears is available at www.mabs.ie.
Who can I talk to about my Loan?
If you require further clarity on the information provided to you, please contact us on the relevant phone number under the link below, or email: email@example.com and we will get back to you to as soon as possible to address your query.
Will I be charged a fee for my Payment Break?
Pepper do not apply any fees for a Payment Break.
Will a Payment Break affect my credit record with the Irish Credit Bureau or the Central Credit Register?
The credit record of those Customers who avail of a Payment Break as a result of COVID-19, will not be affected. Should arrears exist on the account prior to the Payment Break, the status of those arrears on your credit report will remain unchanged.
Will my mortgage interest rate change if I avail of the Payment Break?
No, your mortgage interest rate will not change due to your availing of a Payment Break.
What happens to interest during the Payment Break?
Interest will continue to accrue and be applied to your Loan during the Payment Break based on your current interest rate and in accordance with the terms and conditions of your Loan agreement.
Will this have an impact on my Mortgage Tax Relief (TRS)?
If you are currently receiving Mortgage Tax Relief (TRS) on your mortgage, please note that the Payment Break may have an impact on your TRS entitlement for 2020.
Will this have an impact on my Mortgage Protection cover?
It is important that you check your mortgage protection cover to ensure that it is enough to repay the mortgage in full (considering the adjusted repayments under a Payment Break).