can no longer pay on foreign property

T

the king

Registered User
Messages
74
hi,
I desperately need advice as I am now unable to pay my mortgage on two foreign properties as my business has completely collapsed.

The two properties are interest only mortgages in Cyprus.

I bought one property for €150,000 and should have owed €105,000 on it , but because Igot my loan in Swiss francs, I actually owe €117,000 on it.

The other one I bought for €182,000 and should have owed €128,000 on it, but because I got my loan in Swiss francs, I owe 145,000.

If I default, what are the consequences?

With the world economy the way it is, I wont even get what I owe the banks, not to mention the two deposits Im going to lose, which would have been €95,000.

I also put in two furniture packs, solicitors fees and etc, which amounts to another €30,000.

Any advice on what i could do would be greatly appreciated.

Thank you
 
You need to see a solicitor.
The best help you could get here would be a recommendation to that end.
 
So you owe €262 000 (depending on exchange rates) on 2 cyprus properties.
What are these properties worth now?

It seems likely that you are in negative equity.
I think it is in the banks interest to keep you ticking over, somehow.

I presume you bought the properties on the basis that they would tick over themselves. interest rates have dropped. Why has that changed?

Are these properties linked to your company?
Are they security for something?
are they protected by the companies limited liability?

Why did you expose your self to double currency risk between the former Cyriot currency/Swiss Francs/Euros?

Cyprus is now in the Euro, so if you change (or wait until the SF/Euro rate is favourable) there should be no currency risk going forward.

Are they rented out?
What are they suited to? Long term/short term lets?

I dunno what a solicitor will do that you can't do yourself...only cost you €€€€€€. And yes I have been down a similar road back in the day and manage to wriggle through!

Stay calm and strategise and negotiate with your lenders.
They are over a barrel too....you are now a toxic asset.
 
Hi

its a difficult one, but not impossible to deal with, main thing is, rent the two properties out for what ever you can get, speed is of the essence here.

I know people who have successfully rented their property useing the following web site http://www.expatriates.com/ believe me it will work !

The banks will do a deal, especially if the properties are rented and occupied, ( tricky for banks to do anything here really)

Put it out there, dont give up.....

See what you rent you can get in, and then explain the position to your mortgage providers, it is possible to do all this from your PC, including rental / tenancy contracts.

Best of luck
 
Mommah - "Why did you expose your self to double currency risk between the former Cyriot currency/Swiss Francs/Euros?"

How is asking that question going to help the OP? He's looking for help.
 
Because it seems odd to me, but he may have a rationale that isn't clear to me...if he clarifies...then we could possibly make a helpful suggestion regarding his apparently unnecessary exposure to currency fluctuations.

I hope he finds your post helpful ;)
 
Hi TK,

You posted here when you bought the appartments. Even then some posters suggested you paid top end prices.

the king said:
ive bought 2 properties in southern cyprus last september. they will be finished in march 2007 and october 2007. they are 2 two bedroomed apartments, 1 in paphos and 1 in peyia valley. 1 cost 150000 and the other cost 180000. any idea what sort of capital appreciation should i make if i were to sell them when their finished.i should add that i bought them off plan, right at the very start
Click to expand...

Did you get any independant professional advice before you purchased as suggested by Clubman?

ClubMan said:
Er, the capital appreciation will be whatever you sell them for minus whatever you paid for them (plus any other expenses) expressed as a percentage of the original purchase costs. Hardly rocket science... If you don't know the going rate for property in the market in which you are buying then you really need to get advice!
Click to expand...

hmmm said:
You paid ehm how much? I've a reasonable knowledge of Cyprus and that's a very top end price for a 2 bed apartment.
Click to expand...



Do you still have the properties in Romania and Bulgaria? How are they financed.

Have you properties or other investments in Ireland?

aj
 
Like Mommah mentioned negotiating with the bank is the key here.

Do you think its likely youll be able to get employment soon again? If thats a possibility the bank may be willing to defer depending on how well you plead your case. That could buy you enough time to get comfortable again

At what stage are you? Have you missed some payments already?
 
the king said:
With the world economy the way it is, I wont even get what I owe the banks, not to mention the two deposits Im going to lose, which would have been €95,000.
Click to expand...

Are these the original deposits on these 2 apartments, or two other apartments?
 
As mentioned before, talking to the banks is critical here. They have plenty of other people in the same boat so the best thing to do is to make out a full outline of your assets, debts and cashflow.

When you have this on paper it gives you a better handle on exactly how bad the problem is and what options are available to you going forward.

It is not in the bank's interest to have you default, they have plenty of people doing it already, so you will be ahead of the pack if you put your financial position on paper with an outline of the best case, most likely case and worst case scenario going forward for the next five years (in terms of what employment you may or may not be able to obtain, what cashflow this will give you and how much of it you can logically use to service your loans).

On this basis you should be able to work something out with the bank.

Best of luck with it and don't lose heart, getting through tough times like this make the better times afterwards a lot more enjoyable.
 
How much are these properties worth now? What is the current state of the property market for sales and for rentals in Cyprus? As Cyprus is popular with British people I presume that British buyers have dried up due to the fall in the pound and that some of the British people who own holiday homes there are keen to sell up to take advantage of the fall in pound. Is that correct? Are there still buyers there from other countries, such as Russia and the Middle East, or has that dried up too?
 
Try as best you can to get them rented out at any cost ... any bit of money helps , having them up for sale at a good price with a tenant may entice some buyers
 
Mommah said:
Because it seems odd to me, but he may have a rationale that isn't clear to me...if he clarifies...then we could possibly make a helpful suggestion regarding his apparently unnecessary exposure to currency fluctuations.

I hope he finds your post helpful ;)
Click to expand...

Presumably he borrowed in swiss francs as the interest rates were lower.
The side of that is that the OP (possible unknowingly) was equally ivolved in currency speculation to the tune of the amount borrowed as well as property speculation.
So basically he had 2 bets placed.
A lot of people seem to overlook this when borrowing ina different currency to buy property.

Depending on what currency you borrow in can also affect the LTV i believe.
 
Mommah,

Have to agree 100% with Dublin Dave. Somebody posts looking for genuine advice and instead you subject them ridicule?

When questioned, your then retort; "then we could possibly make a helpful suggestion regarding his apparently unnecessary exposure to currency fluctuations." This is totally ilrrelevant.

Can you please explain, how knowing the motivation behind the move is going to help?

While it wouldn't really be expected that you would admit that the comments were borne out of a stance of arrogant superiority, your flimsy excuse serves only to dig yourself in to a deeper hole.
 
Paddy! said:
Mommah,

Have to agree 100% with Dublin Dave. Somebody posts looking for genuine advice and instead you subject them ridicule?.
Click to expand...

Hey Paddy, I was asking a genuine question.
Perhaps the OP was being paid in swiss francs etc...
Maybe there was a reason.
On the other hand maybe the OP didn't consider this was exposing himself to additional risk.
In this context, it would probably be wise to convert the mortgage to € when the SF/€ rate is optimum.

But if he has a more sophisticated rationale....like he has money in a swiss bank account. He needs to clarify.

Paddy! said:
When questioned, your then retort; "then we could possibly make a helpful suggestion regarding his apparently unnecessary exposure to currency fluctuations." This is totally ilrrelevant.
Click to expand...

Its extremely relevant as negative currency fluctutations are putting him in a deeper hole, than if his mortgage was in euros.

Paddy! said:
Can you please explain, how knowing the motivation behind the move is going to help?
Click to expand...

See above
Paddy! said:
While it wouldn't really be expected that you would admit that the comments were borne out of a stance of arrogant superiority, your flimsy excuse serves only to dig yourself in to a deeper hole.
Click to expand...

Its deeper holes that both me and the OP are worried about.
Where have I been arrogant or superior?
I simply asked for more information on the currency issue, which is a key problem, before I offered any more opinions.
 
I think Mommah asked some valid questions. Which cant be sorted out since op has not responded. ( and she was a lot more helpful than the 2 people that only gave out to her......big help that is to the op, at least she was trying to understand what made the op go down the road that he did )

Is the property being rented out at the moment being the biggest question.

If they are then as already suggested the banks will see that an income is coming from the apartments and would want to continue getting those payments. If they just sitting there empty then the op is just getting himself further into debt.

It may be hard to accept but if things are that bad the best thing would be to cut your losses and move on. Yes you will lose the money you invested in the beginning but thats a risk that everyone makes when buying additional property.
 
Hi there

I know the property market in Cyprus very well. Have lived in Cyprus
for seven years and own a house there.

The property game in Cyprus is totally unregulated and the whole property buying process is laced with pitfalls for the uninitiated. The industry is corrupt to the core including developers, agents and solicitors.

A few years ago, all the wise men in the business were advising clients to borrow in swiss francs to take advantage of lower interest rates at a time when Euro interest rates were rising steeply. Very little consideration or understanding of foreign exchange risks is ever muted.

You mentioned "furniture packages" - I squirm when i read this - Always a rip off of the highest order.

150,000 for a two bedroom apartment in Peyia or Paphos is way way above real market rates for 2006/2007. 100,000 is closer to the mark.
The asking price or sticker price is never the real market price.
You will do well to sell a two bedroom apartment for 80000 in the current market

The biggest danger for you now is one that you haven't even mentioned.
The small matter of title deeds. Do you have title deeds ? If you have, great, if not, you have a long road ahead of you.

Are the mortgages with a Cyprus bank ? Which bank. What percentage did you borrow.

Cyprus property appreciated rapidly between 2000 and 2006. 2006 was the peak. Property was an extremely poor investment at that point.

Selling the apartments now will prove very difficult. Local agents give prefeence to selling new properties for the developers (their friends)

I'm sorry, I have no words of solace. You need to take advice from an out of town solicitor and seek out an estate agent that will actively market your property. Be prepared to slash your selling price expectations and make sure you understand the full implications of owning a property that doesnt have title deeds.

Good luck !
 
Paddy! said:
Mommah,

Have to agree 100% with Dublin Dave. Somebody posts looking for genuine advice and instead you subject them ridicule?

When questioned, your then retort; "then we could possibly make a helpful suggestion regarding his apparently unnecessary exposure to currency fluctuations." This is totally ilrrelevant.

Can you please explain, how knowing the motivation behind the move is going to help?

While it wouldn't really be expected that you would admit that the comments were borne out of a stance of arrogant superiority, your flimsy excuse serves only to dig yourself in to a deeper hole.
Click to expand...

Paddy if you are actually the OP (Which I think is likely given that this is your only post.)
I am very sorry if you were offended by my response.
I was asking genuine questions and not at all trying to have a go at you.
 
Suggestion for original poster:

* Try seriously to rent them. Cyprus is winter sun destination. Your Paphos property will appeal to Irish and UK people, 55+, retired or with time on their hands, who want to spend 6 months of the year in the Cyprus sun. Concentrate on renting the Paphos property, as the town is open all year; Peyia Beach less so. Get yourself a single website for the Paphos property which is aimed at renting it; when done well, this can bring in the renters.
* Sell the Peyia property (if you can) at a loss. Best potential buyers are Russians who are still the most active buyers in Cyprus - but not sure how to reach them. Find a UK agent specialising in selling second hand property in Cyprus.
 
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