Woman to pay mortgage until she is 99 after reaching deal to extend term

By October 26, 2021 No Comments

A court has approved a personal insolvency arrangement (PIA) which will allow a 57-year-old woman make mortgage repayments on her home until she reaches the age of 99.

The decision is one of a number of recent rulings where arrangements extending mortgages far beyond normal life expectancy have been approved in circumstances where there is no other workable way of keeping a debtor in their home.

Under the PIA approved by Circuit Court Judge Mary Enright, Dubliner Belinda Kane will have the term of her mortgage extended to 504 months.

The term extension allows for more manageable mortgage payments.

Should she die before the end of the mortgage term, the remainder of the mortgage will be paid from her estate.

The arrangement had been objected to by her lender Permanent TSB.

The court heard Ms Kane, from Coolock, got into financial difficulty after losing her job and her mortgage fell into arrears as she struggled to make ends meet.

Her partner died two years ago but he was not covered by insurance as the policies had lapsed. Ms Kane had thought they were covered for some kind of mortgage protection, but she had now been left with the full debt to repay.

Her lender had allowed her to make interest-only payments for a period after her partner’s death but was no longer doing so.

Ms Kane’s home was said to have a market value of €342,000, with over €104,000 owed on the mortgage.

In an affidavit, her personal insolvency practitioner (PIP) Judy Mooney, of McCambridge Duffy, argued Ms Kane needed a long-term solution.

Under the PIA presented to the court by barrister Keith Farry, for the practitioner, her arrears are to be capitalised and the mortgage extended for 42 years. There will be a moratorium on her debts for 12 months to allow her to pay PIP fees and a small dividend to creditors, after which she will face a variable interest rate, which currently stands at 3.95pc.

Permanent TSB had argued it was not appropriate to approve the PIA as it was not fair and equitable to the lender and they would be unfairly prejudiced. However the PIA was approved last Tuesday.

Ms Mooney argued the arrangement would allow creditors recover debts due to them to the extent permitted by the means of the debtor.

She also argued the arrangement gave a better return for creditors than if Ms Kane was forced into bankruptcy.

The case is one of a number of recent ones where mortgage terms have been extended into old age to make monthly repayments more manageable.

As a result, some creditors, including Start Mortgages and Mars Capital, are said to have indicated the practice could be used as a practical debt solution.

Earlier this year, the Central Bank warned that people aged 60 and over make up a quarter of the 29,000 people in long-term mortgage arrears, leaving them at risk of losing their homes unless lenders come up with more “extensive or ambitious” ways to restructure their loans.

The High Court previously approved a PIA for a 54-year-old woman to make mortgage repayments on her family home until she is aged 90.

The Circuit Court has also approved an arrangement under which a couple’s mortgage was extended until one of them is aged 115 and the other 106.

However, the courts have not approved such arrangements in all cases.

Last April the High Court refused to approve a pensioner’s PIA which would have seen her continue to make mortgage repayments until she was 98 as it was felt it would not be able to comply with the terms of the proposed arrangement.