Negative equity in 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 explained

Negative equity occurs when your mortgage is more than the value of your property. For example, your outstanding loan is 100,000 euros, but your property is now only worth 50,000 euros, leaving you with a shortfall of 50,000 euros.

Unfortunately, negative equity has become a huge issue thanks to the 2008 financial crash, especially in Cyprus. Cowboy developers sold properties at inflated prices, and many lenders gave borrowers interest-only mortgages leaving many owners in crippling debt.

With all the problems combined, Cyprus has become a hot spot for negative equity.

When negative equity becomes a problem

A change in circumstances can quickly result in many property owners in Cyrprus wanting to sell, but negative equity is the biggest blocker. The majority of our clients come to us with two main issues which include;

They want to sell the property, but the value has dramatically decreased.
They have an interest-only mortgage and want to sell before the huge repayments kick in.

In either case, you, as the borrower, will be responsible for the shortfall, no matter how big.

For those who walk away from a shortfall, Cypriot banks will take action.

The consequences of negative equity

For those who believe walking away from a shortfall is a straightforward solution, that couldn’t be further from the truth. Cypriot banks will now act against you in Cyprus and your home country to collect the debt.

Initially, they will contact you themselves or via their legal team. If this fails, they have been known to sell the debt to vulture funds, who will chase you in your home country without issue.

Unlike the Cypriot banks, vulture funds know how to chase you in your home country and will use aggressive tactics to get what they are owed. Many issues will arise, including term charges on your loan, which will make the amount owed even higher, and charges on your UK assets, which will put your financial future at risk.

Tackling negative equity with solutions

Negative equity is difficult to escape from, and it can have a physical and financial effect on your day-to-day life. That being said, there are options to escape and draw a line under the financial nightmare with EU Property Solutions.

For over a decade, we have helped our clients with vulture funds and Cypriot banks reach life-changing settlements. When instructed, we will work closely with our legal team in Cyprus and remove the burden of you communicating with the lender until the settlement is done!

Take a step in the right direction today by calling 0330 124 1230 or emailing [email protected] to book a free initial consultation.

Yes, they can. Although dealing with Swiss franc mortgage issues complicates the process, 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.

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.

If you are in negative equity and unable to sell without a significant shortfall to pay your bank, we recommend seeking professional help to explore options like assisted sales or voluntary surrender. EU Property Solutions specialises in helping homeowners resolve negative equity efficiently.