Certainly, if you are still looking to purchase a property abroad or release equity from your foreign property, PBUK is still lending on properties in Greece and Bulgaria – and unlike many UK banks, it has not raised its rates over the past few weeks.
As with bad jokes, terrible timing makes up much of the credit crunch problem. The credit crunch itself is a real issue, and this should not be forgotten, but what makes it far worse is that when we have all become used to relatively cheap money, suddenly interest rates are rising at exactly the same time as supplies of many basic food and natural resource raw materials have come into short supply. The Indian and Chinese economic explosions continue draining world resources of grain, steel, oil etc. – just when the Western World needs these to remain cheap and plentiful to partially off-set the rising borrowing costs.
What this means is that if you have been prudent when times were good, you could now profit whilst those who blew caution to the wind are learning the golden lesson sadly forgotten since the early 1990's – that every penny you borrow at some point has to be repaid and that you should plan for repayment to be made by you and not from a rising market.
There are adverts galore offering enticing interest rates for your cash deposits (though reading the small-print as to when your interest is payable and when you can actually take your funds back away from the deposit account is highly advised). Piraeus Bank UK offers an account paying LIBOR (more than the traditional Bank of England Base Rate at the time of writing) with a minimum holding period of just one month and with a minimum deposit of £50,000.
For those with cash savings who wish to raise funds without actually using all their cash as their equity injection, cash collateral loans (also know as set-off loans) can be a good idea. In effect, what this does is mean that you never actually lose your deposit (unless you default on your loan).
Piraeus Bank offer two versions of the cash collateral loan – 100% set-off and part set-off. If you are prepared to deposit an amount equivalent to the purchase price, the Bank will lend you that much again without taking a charge over the property and so saving you on the usual associated costs (valuation and legal fees). If at any point you need to use some of the set-off monies, at that point Piraeus bank will be happy to substitute the cash with the property as security at the terms applicable at that time for this type of loan and subject to the usual conditions (satisfactory valuation, legal and credit searches). The advantage of this structure is that it allows quick purchases for the cash-rich and whilst the deposit funds earn Libor, the loan is charged at Libor plus a small margin (much lower than a standalone loan) at significant overall cost savings.
For those with less than 100% cash to put aside in the blocked deposit account, the same principle as above applies, but from the outset the Bank will have to take a charge over the property also to make up for any difference in its risk exposure. However, again, the deposit will earn interest at Libor with the loan being charged at Libor plus a small margin, which overall has real cost savings against a standard standalone mortgage product. The other advantage of reduced interest payments on your loan is that you can potentially qualify for a larger loan towards your purchase. In a climate of falling prices this can prove particularly attractive as it would allow for a larger property to be purchased.
The other main area where you could possibly benefit in the current climate is if you already own a property in the Eurozone and have done so since before September 2007 – when the international markets got wind that all was not well with some of the world's biggest banks.
The Euro has risen in value against other currencies considerably since Quarter 3 of 2007. What this means is that any equity you have in your Euro-zone property will now be worth more in pound-sterling terms. This is quite simplistic in that it assumes that your property has increased in value to allow for this equity to build up, however the theory is correct. Please bear in mind however that taking out a larger loan means larger repayments and therefore this must be factored into your calculations.
If you are looking to raise equity and you own a property in Greece or Bulgaria, you could do a lot worse than contact Piraeus Bank UK – the Bank that is determined to make buying and raising equity on overseas property as simple as buying next-door.