Advice from EU Property Solutions
With the news that many people are reaching the end of their mortgage repayment terms without the cash to pay off the rest of their interest-only mortgages, EU Property Solutions are warning that the situation could get worse for those who are also facing foreign property debt.
“When interest-only mortgages were especially popular abroad and in the UK, about ten years ago, they seemed a very attractive proposition,” said James Bell, Managing Director of EU Property Solutions. “However, many people are approaching the end of their mortgage terms and are realising that they just haven’t got enough money to cover the full mortgage, not to mention that the values of many properties are worth less than what was initially paid. The fact is, the repayment crunch is coming, and hundreds of thousands who thought they were in good financial shape will be forced to reassess.”
Consequences of homeowners taking out an interest-only mortgage and being unable to repay are not pleasant. They can range from repossession; losing the home entirely, attempting clear the debt by selling and downsize to a smaller home, or trying to release equity in the property. Realistically, these options are not viable for those who want to stay in their homes. For those with foreign property, especially in Spain, where the property market is still floundering, the last option may not even be possible.
Although in the UK financial regulators have severely restricted the terms for who can access this kind of credit, European lenders follow different rules. It could be that the beginning of the repayment crunch in the UK heralds the beginning of a similar crunch across the continent across the coming years. Many of those who have purchased property both in UK and Europe might well be hit by two repayment crunches, leaving them no options at all.
“Nobody could have predicted how badly the Spanish property market is still doing after so many years,” added James Bell. “It leaves those who own foreign property with very few options if they want to vacate their home abroad — so owners should be coming up with a plan to repay lenders sooner rather than later.”
EU Property Solutions is committed to finding solutions for anyone who is having trouble with negative equity or debt on their foreign property, whilst also assisting those with similar issue in the UK. To find out more, just visit www.eupropertysolutions.com and contact them online.