As the possibility that North and South Cyprus could reunify grows a little greater, some Britons who have bought property in North Cyprus could face legal battles to keep their home. Those who don't own the title deeds to the land the property sits on could find ownership disputed by former Greek Cypriot residents who fled over 40 years ago.
Cyprus has been divided since 1974, when Turkey invaded the north of the island in response to an Athens-backed military coup. Greek Cypriots were forced to flee from the north to the south, abandoning their property in the process.
Since then, many foreign house hunters have been attracted to property in northern Cyprus, as it is often cheaper than in the south. Unfortunately, some buyers purchased property or land in the area without acquiring clear title deeds to the land. In these cases, it's possible that the person selling them the land did not have the permission of the original owner to do this in the first place.
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Legal precedent favours these original owners. The European Court of Human Rights has ruled in a number of cases that holders of property in northern Cyprus before 1974 continue to be regarded as the legal owners. Purchasers could face legal proceedings in the courts of the Republic of Cyprus, as well as attempts to enforce judgements from these courts elsewhere in the EU, says the Foreign & Commonwealth Office (FCO).
In one high-profile case in 2010, a displaced Greek Cypriot took court action against a British couple who had purchased his land and built upon it. The local district court sided with the original owner, and ordered the demolition of the Britons' villa, pool and fencing. The couple was also ordered to give the land back to the former owner, and pay him damages, says the Press Association.
The handling of pre-1974 Greek Cypriot title-owned property is a key issue in the negotiation talks. More court cases are expected as the two governments try to reach agreement. Property owners and potential purchasers should consider that a settlement of the Cyprus division could have serious consequences for property they own, warns the FCO. If you have bought property in northern Cyprus, and are concerned about the legal status of your ownership, you should consider seeking independent legal advice.
You could save a fortune by switching mortgages
Homeowners with equity release mortgages taken out more than five years ago could save a fortune by remortgaging, says Sarah Davidson on ThisIsMoney.co.uk. Lifetime mortgage rates have dropped from around 8% in 2007 to as little as under 4% today. Although borrowers taking out lifetime mortgages at today's low rates are "nearly always" locked into deals by permanent expensive early repayment charges (ERCs), people who took out more expensive loans before 2012 are "much more likely" to have fixed-term ERCs that have since expired.
Take the example of someone who took out a lifetime mortgage in 2005, paying a rate of 6.99%, compounding monthly, which is equivalent to 7.22% at an annualised rate. If they are 75, and the balance owed is £70,000, they would qualify for a lifetime mortgage with Aviva at just 4.37% annualised. In this scenario, they would have recouped their fees (of around £2,500) in the first year, saved £11,231 after five years and £65,056 after 15 years.
One of the reasons that small differences in rates can make such a huge difference is that borrowers who take out lifetime mortgages tend not to repay interest monthly. Instead, interest is rolled up into the outstanding balance of the loan and this is deducted and repaid when the property is sold or the borrower dies. The effect of rolling up interest can be "devastating", says Davidson. But because none of this affects cash flow, many people don't realise how expensive their mortgage actually is.
Lenders are unlikely to volunteer information about ERCs. So it's well worth checking whether you could save money by switching, even after taking the fees into account.
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