Defaulting on Cypriot mortgages

jakpot

Hi, I have a swis franc mortgage in Cyprus on a cypriot property. I now owe more then I borrowed due to the exchange rates from CHF back to sterling. The property is let out for holiday lets but now due to the exchange rates the income is not covering the mortgage payments. Even though we are pretty much fully booked. Does anyone know what happens if I dont make the payments or only make part of the payments? Presumibly they will re-posess but any ideas on a timescale??
This has become a nightmare situation. I cant even sell the property because again the rates are not in my favour. To break even I would need to sell for EUR200k and the property is only worth EURO130K. A huge loss.
Help please...........

Mands

jakpot wrote: »

Hi, I have a swis franc mortgage in Cyprus on a cypriot property. I now owe more then I borrowed due to the exchange rates from CHF back to sterling. The property is let out for holiday lets but now due to the exchange rates the income is not covering the mortgage payments. Even though we are pretty much fully booked. Does anyone know what happens if I dont make the payments or only make part of the payments? Presumibly they will re-posess but any ideas on a timescale??
This has become a nightmare situation. I cant even sell the property because again the rates are not in my favour. To break even I would need to sell for EUR200k and the property is only worth EURO130K. A huge loss.
Help please...........

A CHF mortgage on a Cypriot new build? Ouch. You are certainly not the only one in that position but that would be little comfort I imagine. Every story I hear about CHF mortgages seems to involve them being recommended by the developer which is never a good start point.

They will repossess eventually, but apparently it will take much longer than in the UK. But if they do and there's a shortfall, which there will be, then they may come after your UK assets.

To avoid that talk to a solicitor in Cyprus and start talking to the bank; the bank only repossess as a final option so there may be something they can do to restructure the loan.

It would be worth doing some research on local forums, this problem does come up from time to time. Both Eastern Cyprus & Cyprus Living (Paphos based) have lawyers who give time to responding to user questions. Below are links to the legal sections of both:

http://easterncyprus.com/viewforum.php?f=8&sid=5ed72da0755813c40663a2c3edbd8b52

http://www.cyprusliving.org/phpbb/nfphpbb/viewforum.php?f=32&sid=bf00b9acc794b5801baa3a10ab4fd040

It would also be worth reaching out to Nigel Howarth. You'll find him on both of the forums listed and also on his own website. Nigel is a property expert on the island and is also, from memory, the Telegraph's Cyprus specialist. He is very approachable and, in my experience, does respond to private emails.

Best of luck with this,
Mands

VIGILANT22

This is Nigel's webite and he has a forum also...and as mands stated he does respond to individuals...

http://www.cyprus-property-buyers.com/intro/about.htm

It is worth registering on the forum as you may even find others who have bought thru the same channel as yourself....did you but direct from the developer or did you buy thru a "well known" network of professional UK businesses made up mostly of qualified independent financial advisers???

FraudBuster

Just for info, but some of these funds were used to fund a property development in Cyprus.

The former director of Satellite Direct UK, Satcover and Homecare Services Agreements was found guilty of defrauding the taxman of over £600,000.

http://blogs.mirror.co.uk/investigations/2010/02/david-reynolds-of-satcover-gui.html

jakpot

Thanks Mands and Vigilant22 for that info, I will def have a look at those forums and also plan to email Nigel.
It was a new build property and we bought direct from the developer.
I did liase with the bank about how to bring payments down (they have doubled in 2 yrs due to ex rate) and the only suggestion they had was to change to int only which they can only do for 12 mths. I requested to do this and despite the fact that this can be done in the uk at a touch of a button (I was a mtg adviser in my previous life before kids) in Cyprus this simple task seems to be taking an age - approval needed from various committees etc. Anyway, 8 weeks later and still hasnt happenned!! Ho hum, will chase again Monday. Fingers crossed.

VIGILANT22

Many of the banks there actually offer interest only for the first 5yrs...did the developer introduce you to the bank?...If it is a developer such as Pafilia they normally have an after sales team who can assist you with any discussions with the bank

jakpot

We bought through "Leptos". They didnt introduce us to the bank, we used an independant mortgage broker company in the uk who specialised in overseas mortgages. Will speak to the bank again about the interest only i think