COVID - Bank Loan Repayment Breaks.
by Eddie O'Shea

The Banking & Payments Federation Ireland announced on 18th June 2020 that Irish banks have extended the deadline date for new payment break applications to 30th September 2020 (previously the scheme was extended to 30th June 2020).


What is the scheme?

The payment break gives you a break from repaying your mortgage or personal loan. Under the arrangement, the loan repayments or part of the loan repayments are postponed for an agreed period of time.


Can I still apply for a payment break?

Yes, you can still apply once you have been impacted by COVID-19 and feel you may have difficulty meeting repayments. It is important to note that your loan must not have been in arrears prior to March 2020.


Is there a cost?

While there are no upfront costs associated with the payment break, you will however be charged interest on any repayments that are not made over the course of the payment break. i.e. Unpaid loan interest will be accrued, which will result in your outstanding loan balance increasing (see options below).


What should I do if I can return to full repayments before the end of the payment break?

It is important that you return to making full repayments once you are able to do so, as this would make the loan less costly for you in the long term.


What are my options when the scheme stops?

At the end of the payment break, your monthly mortgage repayments will be recalculated to take into account the repayments that were put on hold or reduced and the interest charged during the payment break. There are two options that may be available when the payment break ends:

  1. Increase your repayment amount over the existing loan term, or
  2. Extend your loan term to account for the missed prepayments.


What should I do?

it is essential that you contact your advisor and lender as early as possible to be able to avail of a payment break. Please be aware, guidelines state that applications for a repayment break state that you must have applied in writing and have received approval from your bank on our before 30th September 2020.


It is important to consider the following before your application:


  1. You must be careful when answering the generic questions issued by all the regulated banks for this extension.
  2. Your answers could lead to you been challenged by banks, as they may feel that your companies long term outlook might result in the company not been able to meet its banking covenants.


Please contact us today to find out more about the above and how we can help you and your business recover from the Covid-19 crisis.




Eddie O’Shea