The recent depreciation of the Polish zloty has hit hard all investors who have mortgages in Poland in Swiss francs (CHF). Their monthly repayments have increased significantly as a result of the fluctuations in the exchange rate.

Moreover, we expect the currency trend to continue at least in the short term. This is mainly because of the growing account deficit, the expected slow down in Polish exports and FDI inflow.

Investors, who are greatly concerned about further exchange rate movements, may want to consider a new mortgage plan from Noble Bank for its existing customers.

The proposition is about setting a maximum monthly repayment for the next 2 years. The maximum monthly repayment is calculated at a preferential exchange rate (currently Noble's exchange rate is 1CHF= PLN2.5 rather than the official exchange rate of 2.84).

That means that in a situation where the monthly installment calculated at the current exchange rate turns out to be lower than the set maximum repayment, a client pays the lower rate.

On the other side, when the installment turns to be higher than the set maximum, the client pays only the maximum and the remaining amount is suspended at zero interest and added to the capital owed after 2 years.

The fee for the arrangement above is 5.45%, calculated on the total amount of loan and this can be added to the existing mortgage.

Such a solution, in broker Jakub Król's opinion is beneficial:

'Such an arrangement should help you to plan and manage your budget at home plus, more importantly, it will allow your cash flow to match your rental income from Polish apartments.'

Additionally, if a client decides to go for this offer, the CHF Libor rate would be corrected to 0.61%, which will lower the interest rate on his/ her mortgage. The current Libor rate in Noble Bank is 2.56% and is going to be revised in March.

The Libor is decreasing as a result of the Bank of Switzerland cutting the base rate in the last few months, but banks revise their rates usually every quarter.

The lower interest rate can obviously partially cover the depreciation of the Polish zloty against the Swiss franc.

Anyone looking at this kind of mortgage would need to consider the numbers carefully, as the fee of 5.45% of the total loan may well considerably outweigh the value of deferring a proportion of the repayments over the two year period.

For example, with the gap between the exchange rate of 2.8PLN to 1CHF on offer at present and with the capped rate of 2.5 from Noble above, you would be deferring about 10% of each payment.

On a 25 year CHF100,000 mortgage at 5.5% the monthly repayment would be around CHF600. So, you would be paying a CHF5,450 fee to delay payment of ~CHF60 per month - roughly equivalent to borrowing CHF1,440 and paying interest of CHF5,450.

This offer could be obtained only through Jakub Król, so if you're interested or want more details please contact Jakub: Jakub.Krol@noblebank.pl

We are aware that for the last month there has been a lot of uncertainty about mortgage lending in Romania for non-resident clients.

But we are pleased to announce that our Romanian mortgage partner Easy Credit have today signed a new collaboration contract with a bank which allows them to offer non resident mortgages with very competitive conditions (compared to other Romanian banks).

Recently most Romanian banks have increased their interest rates for EURO credits a lot and have ceased mortgage lending in Swiss Francs and more importantly have tightened the lending criteria due to Norms 11 issued by the National Bank of Romania which at some banks affected also nonresident clients.

Easy Credit have secured the best deal possible for non-resident clients as the majority of other Romanian banks have increased their pricing policy considerably.

NEW MORTGAGE CONDITIONS FOR NON-RESIDENTS

Accepted incomes (80% is taken into consideration for foreign income)

• Income from (foreign) salary (minimum 12 months employment history) *
• Income from (foreign) self employment (minimum 24 months history) **
• Income from (foreign) dividends (minimum 24 months history) **

* this can be through one or several employers during the last 12 months
** The average income per month is calculated dividing the last fiscal year net income by 12

Debt to Income Ratio

• Up to 65% *

* the percentage of the net eligible income available for a Romanian mortgage installment. (This includes taking into consideration all other foreign credit liabilities)

Loan Amount

• Minimum 30.000 EURO
• Maximum - depending on the value of the property and client's eligible net income

Loan Duration

• Minimum 5 years
• Maximum 35 years (see conditions at Beneficiary)

Loan to value

• Maximum 75% of the evaluated amount of the property (after completion) but not more than the balance of the purchase agreement

Pricing for mortgages in EURO

• 6.76% one year fixed (for newly built properties)
• Variable interest rate after 12 months EURIBOR 3M + 3.96%
• Monthly mortgage commissions/fees: ZERO
• Yearly mortgage commissions/fees: ZERO
• Bank's arrangement fee (one time): 2.5% (which can be included in the approved mortgage amount)
• Early redemption fee: 3%
• Evaluation Report (appraisal) : 100 EURO (to be paid after pre-approval)

PLEASE NOTE: These terms are subject to change and status. Easy Credit are meeting with the risk manager at the finance provider to discuss terms further.

Easy Credit are discussing if foreign rental income can be taken into consideration (in case of buy to let properties to offset mortgage payments where applicable). For this a copy of the rental agreements need to be provided including a Self Assessment Statement (UK) or any similar statement that can show that the income has been declared to the authorities and taxes have been paid.

These mortgage conditions apply for all foreign citizens, and a mortgage application is subject to status and can be subject to the bank requiring additional documents (which Easy Credit try to prevent as much as possible)

We have been informed by Easy Credit that an approval in principal (subject to documentation) can be communicated within 4-6 working days, and legal approval of the collateral papers including valuation will take up to 3-4 days.

Final approval of a mortgage is when the bank combines the financial pre-approval together with the collateral approval. This takes typically around 2-3 days after which the bank will draft the necessary contracts (1 day).

A Power of Attorney can be used to sign the actual mortgage, but we have been told that this bank does prefer the client to come personally to Romania to sign the necessary mortgage documents.

This information was supplied by Easy Credit, our Romanian mortgage partner. To obtain a free, no obligation quote from Easy Credit for your Romanian investment proeprties, visit our mortgage quote service and choose Romania.

We have been inundated lately with questions from investors about the effect of the Credit Crunch on the mortgage market in Central & Eastern Europe.

At the same time, rumour and misinformation has led to a heightened level of concern from those who have invested in off-plan property in the region.

To address this, we have been investigating exactly what is - and isn't - available in the markets in which Property Secrets has offered investment opportunities - and from whom.

Here's the definitive breakdown of current conditions:

Poland

Currently, Raiffiesen Bank have stated they will be pulling lending to non-Polish residents. There is no indication of when this decision might be reversed.

Both Noble Bank and PKO Bank are still offering mortgage products to non-residents, however, and Property Secrets clients are currently using the London branch of PKO.

Czech & Slovak Republics

The Credit Crunch does not currently seem to be affecting the Czech market at all and this, it seems, is down to the fact that non-resident loans currently account for just 3% of overall bank lending in the country.

Again, the Slovak mortgage market appears equally unaffected with banks still willing to lend to non-residents.

Bulgaria

The latest information we have from Bulgaria is that there are currently no issues with lending to non-residents and we have an agreement in place that should this look like changing we will be informed immediately.

Incidentally, we have had a number of queries from clients regarding the fees charged by our recommended partner Bulgarian Home Loans. We asked them to respond and explain their charges.

You can download their in-depth response here: Bulgarian Home Loans Fees Explained

Romania

Due to Regulation 11, imposed by the Romanian National Bank, commercial banks had to re-submit their credit norms at this same National Bank. One by one the Romanian National Bank has been signing off the approval of each bank's credit regulations since the beginning of October, and in only one particular case a certain Romanian bank has decided to put on hold non-resident financing. This, of course, does not mean other commercial banks will do the same, and we are awaiting the newly approved credit regulations of other Romanian banks who will include non-resident financing

We have been in constant talks with our partners on the ground, as well as several banks, and there is good news on the way.

New credit norms will be issued by the Romanian National Bank this month and banks are already preparing new lending criteria and products. We will have all the details later this week and will announce them as soon as they come in.

In the meantime, we have been looking at additional brokers as recommended by our members. The feedback we're getting is positive and we're moving in the right direction with these brokers. We'll update you as soon as we can on this too.

In the meantime, please feel free to call us with any questions regarding finance you may have.

Or anywhere in Bulgaria's ski resorts or coastal areas for that matter...

The smart investors who have listened to our advice over the years will know only to well the pitfalls of buying on the coast.

Those pitfalls have recently opened up into chasms for anyone still considering an investment in the likes of Bansko or Sunny Beach with this weeks' news that InvestBank, one of Bulgaria's major banks, are effectively pulling out of supplying mortgages on all properties in ski and coastal areas.

InvestBank will make it virtually impossible to invest in anything other than a modest beach hut, by placing a maximum valuation of €500 per square metre "on all properties in tourist resorts in ski and coastal areas".

Investbank add that of this €500, only 60-70% could be made available by mortgage. With prices now averaging €850 psm, few will be taking them up on this offer.

So why are Investbank doing this?

Well, according to their experience, they have seen "substantial decreases in property prices" on mountain and coastal resorts due to over supply and the effects of the credit crunch.

The bank has been slow to catch on...

Property Secrets saw this coming in 2005! The huge supply of new developments has indeed led to an oversupplied market. The boom could only last as long as enough foreigners were willing to buy, the locals were already satisfied.

So with such a huge supply of new properties in these areas there are virtually no buyers on the secondary market.

Then there is cashflow, how can payments on the mortgage be met if investors are unable to find tenants for their properties?

This has led to defaulting on mass as investors have struggled to keep up with mortgages without vital rental income. Tourist numbers are rising but most of them are on cheap package holidays and staying in hotels!

Another reason for the crisis on the coasts and mountains has been agents commissions. Prices paid included 20% VAT and large commissions to estate agents, hence the banks now know that the real value is likely to be far less than the purchase price paid by many unfortunate foreign buyers.

It's not all gloom and doom in Bulgaria...

As far as InvestBank are concerned they would prefer to receive mortgage applications for major cities like Sofia, Varna Bourgas and Plovdiv.

Conclusion - stay clear of the coast and look to the capital Sofia. Here you have all the right fundamentals for growth, shortage of supply, a ready made rental market, high employment with locals who can afford to buy.

The only people making money in the Bulgarian tourist resorts are the agents and developers. With this news even they will be feeling the squeeze.

Property Secrets' Head of Legal & Business Affairs, Debbie Le Goff, was recently in Prague, Czech Republic, meeting with mortgage brokers, lawyers and other related companies. Here, Debbie describes what she found on her latest visit to the country...

The first thing that struck me about Prague this time round - and I am a regular visitor - was the sheer number of tourists from all over the world. The city's attraction continues to grow and it is quite a site to see groups following that single person with an umbrella held in the air. I was almost tempted to buy an umbrella hold it up in the air and see if anyone followed me!

The mortgage market in the Czech Republic remains the most advanced in Central & Eastern Europe with, as Star Capital Finance were keen to remind me, 100% Loan To Value (LTV) mortgages available.

The problem for investors, however, remains that there is still a tendency for banks to give a lower valuation to properties. So even if you obtain 100% LTV, this is likely to become around a 80% to 90% LTV.

Of more interest to investors was a meeting I had with Younique, a new company started by Martin Benik who worked for companies.cz, who enable the formation and registration of Czech companies online.

Younique claim to have a new way in which clients can obtain the EU Card without travelling to Prague. I am waiting for in-depth information concerning this.

The whole EU Card process with Younique is in the region of £1,800, which includes the application costing around £600. If you take into account the cost of travel to Prague, accommodation and food then you meet the £1,200 rate.

Highland Trust, who offer mortgages in Poland, Czech and Romania, were another company I met with, looking to expand the options open to Property Secrets clients - in the Czech Republic and also in Romania.

In addition to expanding the number of finance options available, I also met with a lawyer to discuss possibly increasing the legal options you can choose from. More on this in the future.

The market picture that I was given by all the parties I met was that it is anticipated that property prices will continue rise for about two more years before they start to settle.

Property Secrets member Neil H started a running post on our forums late last year on his experience of applying for a mortgage in Poland.

This was to fund his investment in the Piastow development in Katowice, Poland.

His series of posts turned into an excellent resource for others investing in Poland and applying for a mortgage.

The development ran over by a month, much to Neil's joy as it gave him an extra few weeks to complete the mortgage application process.

Neil felt that allowing six months for the mortgage process was giving himself sufficient time but the reality was very different.

Here's what Neil wrote:

I started off the mortgage application in mid September when I filled in initial assessment documents and returned then to Jakub Krol at Open Finance/Noble Bank and Anna Zuber at Rednet.

On the 15th October and still in the process of filling out the application forms having queried some of the terms on the forms with Noble Bank and Rednet, I commented on the forum that I believed turnaround times were getting better now re mortgage applications. Hindsight is a great thing!

The month of November was spent collecting documents. Jakub is filling out the blanks on the application forms and Anna is doing the same - having suggested I forward a copy of the PPC (preliminary purchase contract).

I was worried about sending all the original documents away and it also prevented me from applying to another bank in the meantime. Had hoped to send these away by the end of the month but didn't end up sending them until mid December.

23rd December Jakub received my application but requested more up to date payslips and bank statements as it took me so long to gather the relevant information that the latest ones were a month or so old now.

Anna Zuber from Rednet has requested the same documents with my application but this is hard to do as they are now with Jakub and replicas are expensive to retrieve!

By January 11th, I still had not got all updated documents to Jakub, thanks to the Christmas holidays and delays in getting documents and I am not starting to worry about only having a couple more months to get this sorted. I finally get these out by the end of the month and Michal Jezewski is now dealing with my application and appears confident I can meet the beginning of March deadline for the first stage payment.

At the start of February, Michal informs me I need a Polish address and POA in place BEFORE they can make a mortgage offer to me. I wasn't aware of this detail and asked him for a recommendation for a local solicitor to provide this.

I get a positive loan decision from Noble Bank on the 19th February at 80% LTV and a rate of 6.6% dropping 1% when the property is handed over.

Getting the solicitor is a delay I could have done without.

By the end of February I've engaged a solicitor and had to go to Dublin to get the POA notarised and apostilled as my local notary advised that the UK foreign office might take 3 weeks to do the apostille. I did the lot in a couple of hours for €100euro total and posted it off.

The next hurdle was to pay the solicitor which turned into a nightmare and was down to the wire.

The Polish solicitor received payment and was in touch with Noble in time for the official transfer date although the solicitor didn't seem to think a few days here or there would be a problem.

The last step was getting an account with Noble Bank to transfer initial funds into.

The offer I received from Noble was the following:
Interest rate: 5.66 %
Interest in a bridging period: 6.66 % (before the bank's mortgage is written in a mortgage book of a property; interest rate is higher in this period due to higher interest rate)
LTV net 80 %
Currency CHF
Repayment period: 360 months

My solicitor signed the agreement on the 11th, so I was only over the deadline by 5 days.

I was pleased to have finally got to the end of the process...I have another 2 investments coming up in Bratislava and Krakow and hope these work out ok and don't take as long!

Neil shared the entire experience with us on the forums to highlight some of the things fellow investors need to look out for. He concluded with some key points:

Neil had intended to apply to 3 lenders, however he ended up applying to only one.

This was because he had to send original documents to each lender and it is costly to request certified copies.

Most of these documents are only valid for a month and by the time lenders get back to you most documents have expired and are not valid. One of the key things is to gather the documents in time.

Also, allow for the time spent posting the docs - couriers are expensive and might not be an option.

After receiving an offer from Noble Neil then had to provide them with an address and solicitor. For this he had to make a trip to Dublin to the local notary, then to the foreign office. Again, this was time-consuming and was not something he had planned for. You need to allow time to go through the process.

Neil's advice then is: Get your paperwork organised in advance, before you apply. Put everything in order - make sure NO pages are missing.

Bank statements should be for at least 3-6 months. Check with your bank as requesting certified copies of statements can cost money.

Know exactly what documents are required and if there is an expiry time on documents, for example, does a statement of net worth need to be valid within the last 3 months.

If certain documents expire within a month - then plan ahead and make sure this is the last document you arrange. This might sound obvious but it is very easy to get caught out.

When dealing with the mortgage broker, or going directly to the bank, make sure you are the one calling them. You need to be foremost in their minds - although Noble Bank were very good and he has no criticisms of them, you need to call them and don't wait for them to call you.

Try and do as much as you can while waiting for the offer so you can move straight away when you receive the offer.

Things you can do include finding a solicitor, for instance. This is to provide you with an address when accepting the mortgage. You need time to shop around and get a good solicitor - Neil only left himself a week to find one, give power of attorney and transfer a euro fee!

Be aware of POA's and apostils - these cost money and you need to budget for these.

When you receive a mortgage offer you will need a bank account already set up and money in the account. Noble Bank did this for Neil, but he advises otheres to check in advance.

Almost one year on from its introduction, 40 per cent of UK landlords are still unaware of the Tenancy Deposit Scheme (TDS) leaving them at risk of committing a civil offence and being forced to pay tenants three times the deposit amount, says leading buy to let mortgage broker The Money Centre.

The Tenancy Deposit Scheme was introduced by the Government on April 6th 2007 to protect tenancy deposits and provide a fairer system for settling disputes about the return of a deposit at the end of a tenancy.

But nearly a year on, independent research commissioned by The Money Centre has found that 40 per cent of landlords questioned are still unaware of the scheme. A further 22 per cent of respondents said they were aware but did not fully understand it, leaving only 38 per cent confirming they were aware of the scheme and understood it.

The results show that awareness levels have plateaued since The Money Centre last reported findings on the TDS scheme in October 2007, leaving a large proportion of landlords still in the dark about the legislation. Awareness of the scheme has actually dipped slightly since October, with a six per cent drop in the number of respondents who said they were aware of the scheme and fully understood it.

Lynsey Sweales, marketing and PR director of The Money Centre commented: "The results of this research are extremely worrying. The scheme has now been in place for nearly a year, yet many landlords are still unaware of the legislation and its implications. The good news is more than half of those surveyed did believe the scheme would benefit both landlords and tenants, as it was designed to do. But until awareness, understanding and participation can be improved the scheme won't be fully effective."

The Tenancy Deposit Scheme was introduced to ensure:

• tenants get all or part of their deposit back, when they are entitled to it,
• any disputes between tenants and landlords are easier to resolve, and
• tenants are encouraged to look after the property they are renting.

Deposits are a big issue for many landlords with half of those surveyed confirming they had withheld all, or part of, a tenant's deposit to cover property damage and other costs (such as cleaning costs and unpaid utility bills) at some stage. Therefore, it may not be long before problems arise due to a lack of participation in the scheme, and if a landlord or agent does not protect a tenant's deposit, they can be ordered by the local county court to pay the tenant three times the amount of the deposit.

While the TDS only covers tenancy agreements made on or after 6th April 2007, as time goes on and tenancy agreements are renewed and changed, all landlords will eventually become affected. It is therefore vital that landlords take the time to understand the TDS now and avoid becoming ignorant of the law.

Lynsey Sweales concluded: "Once again we are urging landlords who are not up to speed with the TDS to do their research immediately and advise them to join their local landlords' association. These organisations provide advice to their members on changes in legislation and can act as a forum to share best practice."

Sources of further information for landlords include:

• The Department for Communities and Local Government: www.direct.gov.uk/tenancydeposit or 0845 609 0696
• Landlords' associations: National Federation of Residential Landlords - www.nfrl.co.uk; National Landlords Association - www.landlords.org.uk; Residential Landlords Association - www.rla.org.uk

The research was undertaken by independent research agency BDRC on behalf of a syndicate of buy-to-let mortgage lenders and brokers. Online interviews among 493 residential property investors were conducted in December 2007.

This blog was supplied by The Money Centre.