Hi
I signed a contract to purchase an apartment in Nov 2006 for 200000 Euros. I used a Euro loan to fund the deposit of 80000 Euros and I must now complete with the remainder in the next few weeks. I will be taking over the builders mortgage. The problem is that the property has fallen in value and is not worth as much as when I signed the contract. Not only will I be starting off with negative equity but I will be paying about ?40000 more than when I signed the contract because of the change in the Euro/GBP exchange rate. Also because of the exchange rate I am paying more interest on my bridging loan and I will be paying more on the mortgage. I hope to rent out the flat most of the time but the rent will not cover the mortgage.  If I cannot complete, the builder will only refund 80% of the money paid so far, plus I will have to repay the bridging loan which again will be much more than I borrowed because of the exchange rate. If I complete, I will be unable to cover the mortgage for very long. I do have a property here but it is not on the market yet. I could sell it and pay a large proportion of the cost in cash, but then my money will be tied up in Spain and I will have nowhere to live in the UK. I did not intend to live in Spain for a few years as I work in UK and I thought it would be a good investment. As it has turned out it looks like I could end up losing a lot of money and possibly losing it all if the flat is repossessed.

I don’t know what to do and would be grateful for any advice/info anyone can offer me

That is a real pickle amigo.

Can you break down the numbers a bit further? It would appear you have two options right? So how do the numbers come out? Do a best case, worst case run through for each option. Clearly the exchange rates and whether you could rent the property out would make a big difference in that.

Try to think through this in purely financial terms first, then let your personal biases enter the equation later. It sounds like you’re going to lose money no matter what.

Thank you, I will certainly try to work on it in this way. I imagine there must be other people who bought off plan up to a couple of years ago who must be experiencing some of the same or similar problems due to changes in currency exchange rates and the fall in the housing market. Are you hearing from others in similar situations ?