Remortgaging to release equity

[Kimberley Charman]

Hi there. I have a client who bought property in Cyprus outright. He now wants to mortage it to release some of the equity to reinvest in other property in Cyprus or the UK. Most advisers I've spoken to say you are not allowed to mortgage/remortgage to release equity for this purpose (only for refurbishment of the mortgaged property). But another investor told me last week he had done just this with the Bank of Cyprus.

Does anyone know if you can remortgage to release equity for investment in more property?

Thanks
Kimberley
Director, Property Investors Road

[Nigel Howarth]

Kimberley,

Does your client have his Title Deeds? If so, there's nothing to stop your client using his current property as collateral to raise a loan to buy a second.

But as far as I'm aware, there are currently no equity release schemes available in Cyprus.

(I also assume that we're talking about property in the Republic of Cyprus and not the northern part of the island).

Regards,

[Kimberley Charman]

Yes it's in the south. He doesn't have his title deeds yet...another issue. Thanks for the info.

Kimberley

[Nigel Howarth]

Hi Kimberley

Unfortunately, as your client does not have the Title Deeds to the property, he's not considered to be it's legal owner.

As a consequence, he/she is going to find it very difficult (if not impossible) to use the property as collateral to raise a loan.

Regards,

[seanx18]

Hi Kimberly,

Nigel is correct in what he is saying. Although i met with the Alpha Bank a couple of weeks ago and they have told me that they are thinking about the possiblity about re-mortgages in properties before having the title deeds to the property. Although this may not be in the near future.

Regards,

Sean

[Nigel Howarth]

Hi Sean,

I can only see the Alpha doing that if there were no outstanding mortgages lodged against the property.

Developers are 'reluctant' to clear their mortgages even though buyers may have paid for the property in full. This limits the resale market because no-one in their right mind is going to buy a property with a mortgage attached!

As a consequence, finding resale property with Title Deeds can be difficult, so potential buyers will naturally go for new/off-plan properties, which are available in abundance. (And of course, as the developer makes no money by selling resale properties, it's in his interest not to repay the mortgage).

Cheers,

[Kimberley Charman]

How would I find out if the developer still has a mortgage attached to the property? Or do you assume if the developer still holds the title deed then there is a mortgage still on it?

Where do I start to get the title deeds for the client (who bought the property outright but now wants to mortgage it to release equity)?

[Nigel Howarth]

Originally Posted by Kimberley Charman

How would I find out if the developer still has a mortgage attached to the property? Or do you assume if the developer still holds the title deed then there is a mortgage still on it?

Where do I start to get the title deeds for the client (who bought the property outright but now wants to mortgage it to release equity)?

Assuming that your client does not have the Title Deed, he should look at his Contract of Sale. This should contain details of the location, plot number, etc that will enable him/her to to visit the Land Registry to discover what the situation is. He'll need a Title Search (something that his lawyer may or may not have done when he purchased the property).

It's important that you client takes his Contract of Sale and passport with him as the Land Registry will only provide the information to 'interested parties'.

Hopefully, your client's lawyer will have lodged his Contract of Sale with the Land Registry for 'Specific Performance'.

It may be a good idea for your client to instruct a lawyer to make the enquiries on his behalf. If he wants to do this, ask him to contact me and I'll put him in touch with an excellent English lawyer in Limassol who specialises in property matters - she'll be able to advise him of the fees involved.

I should point out that developers often mortgage the land on which they're building to 'kick-start' a construction project - and they are not always quick to pay it off!

Regards,

[Kimberley Charman]

Thanks Nigel. Very helpful as is your website. I've got three clients in similar situations, so could you let me have the lawyer's details so I can contact her. The way I work with clients is they pay me a fee to handle all this on their behalf so initially it would be me having the discussions with the lawyer.

If you don't want to put it on this public forum, let me know how I can contact you privately.

Thanks
Kimberley Charman
Property Investors Road

[Nigel Howarth]

Originally Posted by Kimberley Charman

If you don't want to put it on this public forum, let me know how I can contact you privately.

Hi Kimberley,

Thanks for your comments on my website - best to contact me through that, there's a 'Contact' link at the bottom of the page.

Try and do it today please, I've leaving for Jordan early tomorrow.

Regards,