A new UK-based initiative may hold the answer for British ex-pats struggling to maintain mortgage repayments on property that has reduced in value.
The Recovery scheme was devised by the financial services group Marcus James and recently launched in Cyprus. The procedure involves the owner paying a fee of ?495 to the company who will then locate a new investor to take over the mortgage payments for a fee of ?5,000. Hence the property is ?transferred? for the amount of the outstanding mortgage.
Although home owners will forfeit their original deposits, the scheme allows participants to avoid the financial burden of negative equity or repossession.
Marcus James spokesperson Tony Barker told The Independent why the scheme was attracting interest from struggling home owners: ?I’ve met so many people who just want to wash their hands of the whole thing. They want to cut their losses and walk away from a property which has become such a burden.?
The company revealed that it has an unofficial agreement with local Cypriot banks whereby the new investor is permitted to take over the mortgage payments.
There have, however been doubts aired concerning the scheme, as Nick Hopkinson, director of Property Portfolio Rescue mentioned. ?Isn’t the scheme just getting new investors into the same problems as the original buyers but on a different timescale? Even if deposits are supposedly ?gifted?, where is the proof that the property assets were ever worth what was claimed??
Despite these concerns, Marcus James is aiming to develop the scheme in other European countries, Spain in particular. Tony Barker said ?I’m aware that it’s a breach of a mortgage agreement, but such difficult times need drastic measures.?
We tried this scheme, unfortunately, our experience was not a happy one as an Agent connected to the scheme was very clever at working around the rules of the scheme to financially gain himself.