Swiss Franc Mortgage

Financial questions answered by Independent Financial Advisor Mark Nowell

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jaspers dad
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Joined: 07 Jun 2009 15:41

Re: Swiss Franc Mortgage

Post by jaspers dad » 30 Jun 2011 22:19

Hi,
The article is by David Budworth this Saturday.
Cheers Paul



maurice
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Joined: 31 May 2011 09:56

Re: Swiss Franc Mortgage

Post by maurice » 05 Jul 2011 10:47

The Times carried an excellent article highlighting the problems of the swiss franc mortgage. Although the piece fully sets out the problems, it doesn't offer any solutions. Having considered the situation over many months, I believe there are 4 possible options and I set them out as follows. We would appreciate any legal opinions that are available:

1. Continue to repay the mortgage (if possible) on the due dates and whilst the mortgage more than doubles
in capital alone, the interest repayments increase annually and the property becomes unsellable, at
least the Bank is kept at bay!

2. Convert the swiss franc mortgage to a euro or pound sterling mortgage (if the Bank will agree) and at
least crystallise the debt so that the situation does not worsen whilst continuing the repayments. This
is an improvement over option 1 but still there is little hope of selling the property.

3. Take legal action to charge the Bank, Solicitors et al with mis-selling and seek redress. This could be
expensive with high legal costs and little hope of success.

4. Stop all payments, disown the property and wait for the Bank to take legal action - possibly 8 years -
and hope that the UK courts will be lenient in enforcing the Cypriot court's judgement.

If only we knew the outcome of option 4, it might well be the most attractive option. Is there a Solicitor out there prepared to put his neck out???



Maurice Cook



Nigel Howarth
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Re: Swiss Franc Mortgage

Post by Nigel Howarth » 05 Jul 2011 12:24

Hi Maurice

I have a copy of the article - as you may have noticed I contributed towards it (although my name is mis-spelt). I have asked The Times for their permission to republish it in 'Cyprus Property News' and am waiting for their reply.

Option 2 - People have tried to switch to a Euro mortgage but the banks have told them that they will have to pay hefty exit penalties, which will negate any relief they may get from switching currencies.

Option 3 - See http://www.news.cyprus-property-buyers. ... /id=006686 - as for little hope of success, much depends on the specifics of individual cases, it isn't a matter of one suit fits all.

Option 4 - The Cyprus banks are starting to take action against mortgage defaulters. There is no reason why a British court would be 'lenient' - indeed it will not have any say in the matter (and neither will you) if the bank is successful in getting a money judgement against you in Cyprus.

Regards,


Nigel Howarth
Independent information & advice for Cyprus property buyers
Contact Nigel Howarth
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maurice
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Re: Swiss Franc Mortgage

Post by maurice » 06 Jul 2011 00:54

Hi Nigel
Are the exit penalties charged on the existing mortgage? I presume it is to compensate the bank for loss of interest. We are currently negotiating with Alpha Bank who have provisionally stated that there will be no charge to transfer to Euros. We have not yet seen the small print but at the moment it appears promising. We recognise that transferring will be another gamble but consider it a safer bet.
Apart from this, you would seem to be saying that my option one is the only reasonable route? Even if we are successful, it would be a massive case of closing the stable door 4 years after the horse has bolted! I will keep you informed.
Regards Maurice



Nigel Howarth
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Re: Swiss Franc Mortgage

Post by Nigel Howarth » 06 Jul 2011 09:07

maurice wrote:Are the exit penalties charged on the existing mortgage?
I believe so - check the mortgage terms and conditions very carefully.

Until the problems with the Euro come to an end (assuming they do) those in the know cannot see the CHF weakening.

Trhatds,


Nigel Howarth
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maurice
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Re: Swiss Franc Mortgage

Post by maurice » 06 Jul 2011 21:59

"The Cyprus banks are starting to take action against mortgage defaulters."

Nigel - do we have any specific information on the actions so far?

Maurice



Nigel Howarth
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Re: Swiss Franc Mortgage

Post by Nigel Howarth » 07 Jul 2011 09:05

Hi Maurice

There's an article about the Alpha Bank at Bank starts action against developers and buyers.

I know of one other case and I suspect there may be more.

Regards,


Nigel Howarth
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maurice
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Re: Swiss Franc Mortgage

Post by maurice » 30 Aug 2011 16:15

Just an update on our negotiations to convert swissfranc mortgage to euros - the bank say nocharges BUT the new mortgage oferred is over £5000 more than the chf loan! the term is increased to 30 years and the repayments from 475 chf to over 600 euros per month - enough is enough! What legal protection before payments cease? I see no solicitors have given any suggestions to my previous comments!
Maurice



andy0101
Posts: 33
Joined: 11 Jul 2010 12:02

Re: Swiss Franc Mortgage

Post by andy0101 » 03 Sep 2011 12:38

Hi Maurice

I dont think there is any painless way out of the situation,you either bite the bullet and continue paying your payments for at least 3 to 4 years until the euro issue is sorted ,and hopefully the SNB will step in soon with a peg or start buying euros soon to devalue the currency and make it less attractive to investors.
Alternatively swap to the euro option which i think is a bad idea as you are finding at your peril as the banks are unhelpful ,and they would love you to do this as you will be paying interest for another 30 years, what a result for the bank.
Then there is the option i think you are going to take,loose all your invested money and walk away,which would be probably the best option for a lot of people,but make sure your your assests in the UK are protected ,such as transferring your property to a a family member you trust , which you would probably have to speak to a lawyer over.

Regards

Andy



jaspers dad
Posts: 10
Joined: 07 Jun 2009 15:41

Re: Swiss Franc Mortgage

Post by jaspers dad » 03 Sep 2011 15:18

Hi Everyone,

We are just waiting for the paperwork to be sent to us to change to a euro mortgage. This will be the second time we have tried to do this in the past 6 months, the first we pulled out at the last minute. This time, as long as the figures are no worse than what we have at the mo we are going through with it. The Laiki or Marfin as it is now have offerred another year interest only & then back to normal for the remainder of the original period. Yes I know we have got to make the year up but unless they have lied that should be the only extra (other than the actual charges for doing it, about 1500euros).

Am I being naive to think we are only in twice as much debt from original because of the CHF or is it going to be even more? I will certainly let you know.

Andy & Maurice we too are also thinking of giving up but are worried to hell of the consequences. Our house in the UK is on an interest only mortgage which we swapped to finance Cyprus. It is up for sale at the mo but what could a court do, they couldn't force us out could they? If we were in rented also what exactly could they do? Other than a car on finance we have no real assets so I am wondering if they would bother.

Cheers Paul



andy0101
Posts: 33
Joined: 11 Jul 2010 12:02

Re: Swiss Franc Mortgage

Post by andy0101 » 06 Sep 2011 18:29

Hi Paul

The SNB said today that it is to cap the swiis franc at 1.2 euros today and would like at least a 1.3 in the near future still not ideal but a little chink of light that we may be on the way up rather than down.

Andy



Nigel Howarth
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Re: Swiss Franc Mortgage

Post by Nigel Howarth » 07 Sep 2011 20:25

Hi Andy,

For more information on the Swiss National Bank's announcement see Ceiling set on value of Swiss Franc.

Cheers,


Nigel Howarth
Independent information & advice for Cyprus property buyers
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jaspers dad
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Joined: 07 Jun 2009 15:41

Re: Swiss Franc Mortgage

Post by jaspers dad » 15 Sep 2011 21:02

Hi Everyone,
The answer is yes I am naive.
The paperwork has arrived & they will give us a mortgage for 25000 euros more than we owe but it doesn't start until Sept 2014.
I asked for a years interest only on their suggestion & then the capital/interest for the remainder but to start now.
I am sure this will put us into negative equity.
I give up. Anyone got a spare rope?

Cheers Paul



grebow
Posts: 4
Joined: 20 Sep 2011 21:55

Re: Swiss Franc Mortgage

Post by grebow » 21 Sep 2011 12:36

we purchased a villa in cyprus through BMS homes in Birmingham and paid alarge deposit. we were advised to take out a swiss franc mortgage. Now the mortgage has nearly doubled, we have lost the deposit and have no equity in the property. we are thinking of just stopping our payments to the bank because it is bleeding us dry with no way of gettng out.

does anybody have any suggestions or recommendations?



Nigel Howarth
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Re: Swiss Franc Mortgage

Post by Nigel Howarth » 21 Sep 2011 14:49

Hi grebow and welcome to the forum.

In my opinion, foreign currency mortgages pose a high risk and you should not have been sold a CHF mortgage unless you understood the foreign currency market. The problem is what to do about the situation.

You may be able to renegotiate the loan with the bank which should ideally put you back in the situation as if you had taken a loan in Euros or Sterling. Whether the bank will agree to this I cannot say – but it will be beneficial for them to get some money rather than nothing at all.

There are a couple of articles that may help you – ‘HELP – I can’t pay the mortgage!’ and ‘City law firm to protect buyers rights’.

You could try speaking with your local Citizens’ Advice Bureau. They may have access to someone who could advise you on how to deal with the situation.

If you took mortgage advice in the UK, you may have a claim against your advisor. If he was registered with the Financial Services Authority (FSA) at the time, you may complain to the FSA and make a claim against him/her on the basis that if you had been advised of the full facts about your mortgage, you would not have gone ahead. If you are successful but the advisor is unable to meet the claim the Financial Services Compensation Scheme (FSCS) may be able to assist.

You should also check out the Cyprus Property Action Group website.

You cannot just stop making payments as the bank may pursue you in the UK.

Regards,


Nigel Howarth
Independent information & advice for Cyprus property buyers
Contact Nigel Howarth
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