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Foreign Property Debt: FAQs
5 June 2024
In our latest webinar, we discussed one of the biggest questions we hear from foreign property owners struggling with foreign property debt: “Can YOU be chased in the UK for...
Read Full Story4 December 2022 • 4 min read • by Tom Miskelly
Interest-only mortgages are one of the most common issues for property owners across Europe, especially for those who bought pre-2008. These mortgages were billed as a cheap and easy alternative to a traditional mortgage. However, the reality turned out to be very different.
We always advise clients to “arm themselves with knowledge” so, in this article, we have asked the EU Property Solutions team to answer your questions about interest-only mortgages.
The first question we get from most new enquiries is surrounding the idea that their mortgage was mis-sold, especially for interest-only mortgages. If you bought before the crash, you were likely told about ‘guaranteed rental yields’ or ‘imminent boom in prices’. Whilst this may have been true for some, it wasn’t for most. Realistically, most of these mortgages were ‘mis-sold’.
Unfortunately, this reason is useless with lenders. This is due to a combination of factors, including the difficulty of proving mis-selling and the fact that most developers/lenders have since disappeared or been bought over. The best approach is to be realistic that you will not be able to escape a mortgage because it was mis-sold.
In the past, many people with interest-only mortgages have been advised that simply leaving their property and returning to the UK will erase their responsibility and end their nightmare. This is not the case and can have serious consequences for the homeowner.
Failure to pay the mortgage is treated as a default, so your lender will begin action to recover their money. Read the next question to find out what this recovery action might look like…
In short, yes. Lenders have the ability to operate across jurisdictions and can therefore come after you in your home country. Banks are still relatively civil in most instances, provided that you engage in some form, but their patience is wearing thin.
European lenders are painfully slow, so it may be several years before you hear anything, this can make that first letter quite a surprise! If you ignore your lender, they may use the following to recover money:
Although these answers may seem to be all doom and gloom, the good news is that there are always options available. Without going into too much technical detail, there are a few pieces of advice that apply to any property debt situation:
Over the past decade, we have helped homeowners across Europe. During this time, we have developed knowledge, experience and working relationships with major lenders.
This allows us to review each and every case individually, offer real solutions and then act on your behalf to enact these solutions.
If you are struggling with an interest-only mortgage or any form of foreign property debt, do not hesitate to get in touch with our team for a free, obligation-free call. We are always happy to help. You can call us on 0330 124 1230 or email [email protected].
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