Where do banks get real estate from?
Real estate from banks (mortgaged > arrested > confiscated) in Cyprus as well as all over the world appears as a result of the borrower's failure to fulfill its obligations to creditors.
If, for example, a construction company cannot fulfill its debt obligations to a bank, or there has been a collapse in prices, and the developer has gone bankrupt, then the property is transferred to a banking organization, and it puts it up for sale. This practice makes it possible for the borrower to sell the object faster, as a rule, reducing its cost.
There is always a demand for such real estate, since the price tag for such objects is lower than the middle market one and the investor gets the opportunity to purchase profitable housing in good condition, while saving.
Most of the objects became the property of banks due to the biggest economic crisis of recent decades - the time of the big haircut, which fell at the end of 2012.
This was preceded by long-term economic growth, when investors dismantled newly built facilities like hot cakes. The construction sector was developing rapidly, demand was growing, the number of transactions was growing, hundreds of purchase and sale transactions were concluded daily in the country, mortgage loans were issued, which were issued not only to Cypriots, but also to non-residents and construction companies.
The crisis broke out and non-payments on loans began, which allowed financial organizations to confiscate real estate that was pledged by banks under the terms of the mortgage.
Basically, these were objects on the secondary market, but there were also lots in new buildings. Coronacrisis has added offers in the commercial sector. Periodically, Cypriot banks conduct large-scale auctions. This is a kind of sale of real estate, where there are favorable price offers.
Real estate of this type is offered for sale by almost all banks in Cyprus, the largest of which is Bank of Cyprus. Everyone has different credit conditions, but in any case, buying a home in this way will allow you to save money.
Buy real estate from Cyprus banks
Currently, a fairly large number of real estate projects have accumulated in the banking sector, while there is no panic in the housing market. It is growing quite rapidly after the two main blows of the coming decade to the Cypriot economy — the coronacrisis and the cancellation of the golden passports program.
The Government of Cyprus manages to mitigate negative trends with the help of affordable loans, debt restructuring programs and tax incentives. Stabilization allows banks to hold the most favorable offers, and therefore tidbits are becoming rare for nothing. Luxury villas by the sea are unlikely to be bought for a song, but it is still easier to save on buying in the case of collateral real estate.
For foreign investors in Cyprus, quite loyal mortgage conditions and feasible interest rates (4-5% ready). And due to the fact that the prices of Cypriot housing are rising, then after paying off the mortgage it turns out that you have overpaid not such a huge amount.
The advantages of acquiring collateral real estate in Cyprus
1. The price of the object
The cost of banking real estate in Cyprus is lower than the market. It is not surprising that such apartments and houses are sold out very quickly. Often, bank real estate is sold at a cost of 20-25% below the market. However, there are more hot offers. The difference can be up to 50% with the market price. Most often, such objects go to those who have a reliable insider in the banking sector.
By the way, good objects rarely reach the auction.
It is easier to get a loan in Cyprus for the purchase of collateral real estate. And given the turbulence of the world economy caused by the unstable situation in almost all spheres of life, the cost of servicing a loan is often lower than the inflation rate.
You can bargain with banks. Often houses and apartments in banks in Cyprus are published with an indication of the initial price. Clients are invited to make their own offer, which the bank undertakes to consider, accept or reject.
4. Wide selection
Real estate is offered for sale in all regions of Cyprus. As mentioned above, there are offers both on the secondary market and on new buildings, and the range of offers is wide — from apartments to commercial real estate.
5. Extensive use possibilities
Mortgaged housing is profitable to purchase for subsequent rental. In addition, experienced investors are actively investing in objects of this type for resale.
Disadvantages of mortgaged real estate in Cyprus
1. Housing condition
Often, the housing that the bank exposes is secondary and needs reconstruction. There are many old apartments and houses where you need to make cosmetic or major repairs. Banks usually prefer to save on the maintenance of real estate objects that are secured. Imagine, at first the object was owned by the owner, who could not pay for it, and therefore often maintain it at a decent level, then it passed to the bank, which also did not particularly take care of it. But even taking into account the amount of costs for such work, the resale of collateral real estate will give a very good profit.
2. Few tidbits are widely available
Collateral real estate objects that come to auctions do not always please the buyer with a large discount. There are quite a few "antiques" on the balance sheet of banks.
The dates of the auction are indicated on the websites of banks. With rare exceptions, this market is not for beginners. Those who want to get a really good offer are better off contacting professionals.
Have you decided to buy an apartment or a house in Cyprus? Contact DOM! The website offers a huge selection of real estate —residential and commercial. Experienced agency specialists will be happy to help you make the right choice.
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