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Sancho Panza

'my Cyprus Mortgage Repayments Went Up By 166Pc'

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Telegraph 17/12/13

'Thousands of British investors who were mis-sold property in Cyprus have until December 31 to file a legal claim against lenders and developers – or face devastating losses. (Update - since publication, the Cypriot government has extended the deadline to December 31, 2014)

As many as 15,000 Britons bought property in Cyprus between 2003 and 2009. Many bought “off-plan”, meaning building work was still unfinished or hadn’t even begun.

Most of those affected are buy-to-let investors who planned to offer the property to holidaymakers. Some were expats who moved to the island to work or for retirement.

A large number now face financial ruin due to huge currency fluctuations, which caused mortgage repayments to double or triple in size, and plunging house prices.

Banks and developers advised buyers to take out Swiss franc mortgages because the currency was considered stable and the interest rates were comparably low. However, it soared 40pc against the euro in the aftermath of the financial crisis and some banks hiked mortgage rates.

At the same time, Cypriot property values plummeted by 70pc in some areas, trapping investors in negative equity. UK buyers are estimated to have €1.6bn (£.1.3bn) of debt outstanding to Cypriot banks.

Many investors argue their mortgages were mis-sold because they were not alerted to the currency risk by banks. Others said Cypriot solicitors used invalid powers of attorney to commit them to loans with terms different to those marketed.

Developers also took out mortgages using the title deeds on their properties as collateral, which meant their homes could be sold in order to pay off developers’ debts. Some properties were never completed or lacked amenities such as golf courses and spas which were promised by developers.

cyprus_villa_2765458a.jpg

The Wilkinsons' property in Cyprus

The Cypriot government has given investors until December 31 to file claims in the Cypriot courts. However, Duncan McNair of London-based law firm Cubism Law said a legal battle is under way to determine whether mis-selling cases are heard in the UK or Cyprus. He said investors should first lodge a claim in the UK, then lodge a second in Cyprus as protection against the cases being heard there.

David Wilkinson, 41, and his wife, Michelle, 37, bought a house near Ayia Napa in eastern Cyprus in 2007 for £130,000 (€150,000). The couple, who own a small transport business, bought the property off-plan through a firm called MRI Overseas Property. They put down a £30,000 deposit in 2007 and MRI, which has since gone into liquidation, organised a Swiss franc mortgage for £100,000 through Alpha Bank – a Greek lender at the centre of hundreds of mortgage mis-selling claims.

Mr Wilkinson said: “MRI took control of the situation. They told me that getting a mortgage in Swiss francs was the best option because it was the most stable currency. I was told the mortgage repayments would be in the region of €300 to €400 a month over 30 years. I wasn’t warned of the risk that my mortgage payments could almost triple if the currency fluctuated.”

When building work finished in 2009 the couple’s monthly repayment on the mortgage was €300. It has since hit €800 – a crippling 166pc increase.

Mr Wilkinson said: “The state pension in Britain is rubbish in my opinion, and I decided to invest in property in Cyprus for retirement. If someone had told me of this type of risk there’s no way we would have bought the property.”

At today’s exchange rate, the couple would need to find £180,000 to pay off the loan. The property is now worth just £85,000 and Mr Wilkinson fears he will lose his home in Lancashire if he defaults. He said: “I could lose my daughter’s inheritance. I’ve been duped into a mortgage in Cyprus that’s far more expensive than I was told. This has been a total nightmare and I’ve had sleepless nights.”

Mr McNair said investors would be better off fighting their case in the UK because the legal system “has integrity” and judges are “knowledgeable and able”. The Cypriot system can be “slow, ponderous and uncertain,” he said.

In June, London-based law firm Maxwell Alves Solicitors filed an action in the High Court on behalf of 215 clients. George Kounis, a lawyer at the firm, said the Cypriot government could agree to a 12-month extension to the deadline, but urged investors not to take chances.'

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I may be missing something here but who are the borrowers trying to sue?

The BTL firm (broker?) in liquidation or a bust bank effectively run by the Cypriot government that can't afford them to win?

The most they will get out of it is not being pursued in the UK.

Another story for the HPC scrap book under the "when leverage goes wrong" category

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They bet on them going the other way and lost.

I strongly believe the root cause of this is the lack of alternative safe financial products.

For property and pensions there needs to be a gold plated, low risk, state backed option - e.g. 30 year fixed rate mortgage, simple index linked private pension plan. A boring vanilla product from a state institution.

Then there can be risky / low-regulation speculative products which people can take a flyer on if they want - but on the understanding there is no bailout coming and courts won't be spending a lot of time on mis-selling class actions.

Instead we have a nation of badly informed people buying high risk products which ends in disappointment every single year - the only people that gain are the banks and the lawyers doing the inevitable class actions later.

Average working people have no option but to gamble every time they purchase a financial product - it should not be like that.

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I recall the telegraph money section wasn't backward in promoting foreign property investment

Oh the irony

Ian Cowie was it? Mr BTL?

Edited by Si1

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I recall the telegraph money section wasn't backward in promoting foreign property investment

Getting mortgages in non-GBP currencies was all over the place a few years ago.

Every position like that has a winner and a loser.

These positions are easily sold because there is some recent history of winning from it.

You need to ask yourself what the probably is of that win continuing.

It's not fixed odds like a lottery ticket. With most financial positions the odds of losing increase as the length of the win continues.

Yet, I suspect many of these people betting the farm on the non-GBP mortgage win continuing would probably also not buy a lottery ticket the day after a win as they would perceive the odds to have lowered.

The fact stuff like this is not taught in schools is a conspiracy in itself.

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Unless you are a risky gambler, the loan should be in the currency of the persons earnings......you can understand why people were easily led to take out mortgages in euros and swiss francs when at the time the interest rates of loans in those currencies were far lower than sterling at that time, that is without the exchange rate fluctuations......but it could have worked the other way.....sometimes higher potential profits get in the way of logic and reasoning, that or they left their brains on the plane. ;)

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Visit any bookies, hordes of clueless idiots queuing up week after week to throw their wages away without ever bothering to look in to the actual chance of a return. Heaven forbid you should try and educate them, the best you can hope for is to be met with a blank stare. The levels of cognitive dissonance going on in any justification of their behaviour they make turns your brain to mush.

Unfortunately It ain't about the maths, if it was we would all be ok, everyone would understand the exponential function and we could sort ourselves out. It sucks so much that most people in this country are happy to believe 1+1=3 if a bloke with a flash car and a nice suit says so.

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I frequent the bookies on a regular basis lol horse racing is a hobby of mine I do alright I mostly focus on the small field all weather track meetings in the evenings they are easier to forecast.

Last Friday I had 15 straight £5 wins £463

And Saturday 11 straight £5 wins £410

It's covered my Xmas put it that way

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I frequent the bookies on a regular basis lol horse racing is a hobby of mine I do alright I mostly focus on the small field all weather track meetings in the evenings they are easier to forecast.

Last Friday I had 15 straight £5 wins £463

And Saturday 11 straight £5 wins £410

It's covered my Xmas put it that way

I don't think you can say that house racing is you hobby. Unless you are a jockey. I think you would have to say gambling is your hobby.

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I frequent the bookies on a regular basis lol horse racing is a hobby of mine I do alright I mostly focus on the small field all weather track meetings in the evenings they are easier to forecast.

Last Friday I had 15 straight £5 wins £463

And Saturday 11 straight £5 wins £410

It's covered my Xmas put it that way

Utter b×××××cks and if it wasn't and you'd done the same as an accumulator how much would you have won then? It would be an amount long enough similar to the win ie pie in the sky...

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Utter b×××××cks and if it wasn't and you'd done the same as an accumulator how much would you have won then? It would be an amount long enough similar to the win ie pie in the sky...

I don't need to justify anything to you I can understand people doubting this but I can screenshot my ladbrookes account history and post it up for any doubters. Grouping horses together in 1 bet is very difficult I have done it in the past but single wins are more reliable.

I don't gamble big stakes just £5 straight wins combinations & accumulators are very difficult to get up

Also I bet race to race as the meetings unfold so I can see what happening and get a feel for how the next races are going to go . I don't lump them all on together at lunchtime and forget about it as that is a sure fire way to go down.

Think about it if it's a 7 runner handicap race you have a 6/1 chance of winning that race with 1 bet

Edited by Bringingitdown

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Also I bet race to race as the meetings unfold so I can see what happening and get a feel for how the next races are going to go . I don't lump them all on together at lunchtime and forget about it as that is a sure fire way to go down.

Count all the bets you made this past year, are you up or down?

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Count all the bets you made this past year, are you up or down?

That would be interesting but I probably know the answer as it's been proven if you gamble over a period of time you will show a loss.

So why do it?

Like I said its a hobby I like horse racing go to some local track meetings and have a good time. Keep stakes small & speculate with winnings not your own money.

I'll chance say 3 bets at £5 each usually fish a winner out then I'll use those winnings to carry on through the racecards. that's how it happened for me last fri & sat

Sat morning I chanced £5 on a 33/1 shot in a 5 horse race ballyglasheen it came in £170

On being down over time? Well if I am it keeps me out of the pub / shopping at weekends where I'd prob spend a lot more!!! And the wins tend to come when you need them most like when your waiting for payday or Xmas !!!!

Lol

I'm sitting on a deposit for a house when I get some value in the market and I'm not getting any meaningful return on the interest so why not eh?

Edited by Bringingitdown

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That would be interesting but I probably know the answer as it's been proven if you gamble over a period of time you will show a loss.

So why do it?

Like I said its a hobby I like horse racing go to some local track meetings and have a good time. Keep stakes small & speculate with winnings not your own money.

Well then its harmless, its a hobby that costs some money like most others. Why not, I like a bit of a flutter once in a while as well.

As long as you don't hide your losses from yourself and get into trouble.

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