Negative Equity – Cyprus
Negative Equity is the most common form of property debt. However, that does not make it any less serious. Negative equity leaves many homeowners feeling ‘trapped’ by their mortgage.
If not dealt with, negative equity can get worse, and have serious implications for property owners, both in Cyprus and in their home country.
If you are worried about a negative equity property in Cyprus, find out how we can help.
Negative equity is when the value of your property is less than the remaining mortgage. For example, if your mortgage is €100,000 and your property is worth €50,000, you are in €50,000 of negative equity.
Unfortunately, negative equity in Cyprus became extremely common after the 2008 financial crash. This was mostly due to properties being sold at massively inflated prices. These inflated prices came with mortgages (often interest-only) that were handed out irresponsibly and with little to no due diligence from the lenders.
A combination of poor-quality buildings, ‘cowboy’ developers and false promises of idyllic resorts have combined to make Cyprus the European negative equity hotspot.
When does Negative Equity become a Problem?
If you are planning to continue owning your property and you are content with paying back your mortgage, then negative equity isn’t really an issue, as eventually, you will pay off the balance of your mortgage and no longer be in negative equity.
Unfortunately, this is not an option for most property owners in Cyprus. There are two common scenarios that you are likely to find yourself in:
- You want to sell your property, but the sale value has drastically dropped since you purchased it, or
- You have an interest-only mortgage and want to sell before your repayments increase massively
In either case, you will be liable for the shortfall between the remaining mortgage payments and the amount the property sells for. Many people are under the belief that waiting may see their property increase in value. However, this is unlikely to be the case in Cyprus, especially if you bought your property before 2008.
We are aware of the frustration that being ‘trapped’ with these properties can bring. This is compounded by the difficulty in dealing with Cypriot Banks and developers. Many of these original developers and lenders have gone out of business, merged or been sold to other companies. This is what makes dealing with negative equity in Cyprus such a minefield.
What Are The Consequences of Negative Equity For You?
As mentioned above, you are liable for the full value of your mortgage. If you do not pay this, you can face action both in Cyprus and in your home country. This can either come directly from the Bank or, more likely, from a solicitor appointed by a bank. The third and final approach, which is the most concerning, is when your loan is sold on to a third party, or ‘Vulture Fund’.
The process will always remain relatively similar regardless of who is pursuing you. Ultimately, it puts your finances in your home country at risk, as well as your home and any assets such as pensions and investments.
There are various cross-jurisdictional debt recovery techniques. If you want to learn more about them, you can visit our page on legal action in Cyprus or how Vulture Funds recover money.
What are your options?
If you are dealing with negative equity, it is likely you have been suffering for a long time. We understand it may feel like a losing battle, and you may believe that you have exhausted all routes. However, EU Property Solutions have been achieving life-changing results for clients in negative equity in Cyprus for over a decade.
Our experienced team and working relationships with lenders allow us to take an alternative perspective on these issues.
We can help you to get rid of your property, pay a minimal amount and protect your personal finances in your home country. Our team are always available to chat, so feel free to call us for a free initial consultation.
You can call us on 0330 124 1230 or email us at [email protected]
What If I Also Have A Swiss Franc Mortgage?
Although this complicates the process slightly, plenty of solutions are still available. Once your mortgage has been converted into Euros, we can still negotiate with your lender. Overall, Swiss Franc mortgages do not impact our ability to get you an amazing settlement.
Can I Sell A Negative Equity Property?
It is a common misconception that you cannot sell in negative equity. You can sell your property; however, you are responsible for paying the difference between the sale price and the outstanding mortgage, also known as the shortfall. Negative equity also makes it more difficult to find a willing buyer.
Why Should I Trust EU Property Solutions?
For over a decade, we have been helping people in exactly the same situation you find yourself in. We understand that you have probably been lied to by the bank, developers, and estate agents. If our amazing results don’t say enough for themselves, check out some of our testimonials or, call our office and speak to a member of the team. You can even chat with previous clients of ours over the phone!
Why not get in contact?
We are always happy to offer a free, confidential review of your situation.
This helps us understand exactly what you need and, helps you understand the best options to solve your property debt issues.