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Housing Loan


Junior Member

I need some advice on how to proceed with dealing with the Bank officials to negotiate our agreement.
I live in Cyprus and our legal system (common law) is very similar to the US.

I took out a housing loan in 2008

the agreement was a fluctuating interest rate according to EURIBOR + 1.25%

i.e. in 2008 the EURIBOR rate was approx 4% therefore the total interest rate for my agreement was 5.25% for the year 2008.

I started repaying the loan with monthly deposits as normal.

in 2009 I had some difficulties making the repayments and by early 2010 i started receiving phonecalls from bank officials that i am late in payments.

they said,

"Look, you have X amount of arrears, instead of demanding immediate payment of total arrears, we can 'refinance' your loan and add this X amount on top of your initial amount so that you can continue with a slightly increased repayment amount for the rest of the agreement"

i kindly declined and said that i will not sign any documents and gave them my promise that i shall catch up on my payments and cover the arrears due by 2011.

they came back and threatened me that they will take legal action if i don't proceed with their proposal and that they will reposses my house.

at the time being naive and trusting i agreed to their proposal.

so they drafted the 'new' agreement and asked me to visit them at their branch and sign the documents.
on the spot while signing the banksters specifically mentioned the following:

"by the way, we have made a small change regarding the interest rate... since the EURIBOR rate is at a low percentage now we suggest that you "take this opportunity and switch from fluctuating to a static interest rate. this way you can Lock/Secure the current low rate"

i signed the papers and went on with the repayments until early 2015

in 2015 again i had some difficulties in repayments and by early 2016 i received a phonecall from the banksters where they basically said the same things

"you have accrued arrears, you have to cover them now! we will take legal action! etc. etc."

i checked my deposits [which were irregular amounts and dates, i.e. not monthly and not the same amount]

and they totalled Y amount which was 41% of the initial loan amount. i thought to myself how is this possible there's something wrong with what the bank is asking.

went to an accountant and he said the arrears they are claiming are correct if you take the new agreement in account and if you take the original agreement in account they have overcharged you a HUGE amount of interest. 20% of the original loan amount.

after that i looked into the EURIBOR rates of 2010-2015
i was shocked, since the 2008 rate was 4%, after 2010 the rate was plummeted to 0-1%


Now, apparently these guys Used the initial arrears as a preface to secure a new agreement with a static interest rate instead of the EURIBOR rates.

at the moment my accountant is in contact with them to negotiate a new agreement but I am against this as i believe the only proper route is to follow the original agreement.

isn't this contract novation fraud?

thank you for your time


It's a Dry Heat
No, it isn't.

What it is, is that you defaulted on your contract many times and you went along with whatever solution they suggested and then continued to default.

Nobody put a gun to your head.

It was your choice to blindly go along with it.


Junior Member
No, it isn't.

What it is, is that you defaulted on your contract many times and you went along with whatever solution they suggested and then continued to default.

Nobody put a gun to your head.

It was your choice to blindly go along with it.

after better examination with an accountant, we calculated the loan balance considering the 1month-euribor interest rates properly. the results show that there were no accrued arrears in 2009/2010.
the bank was supposed to adjust my installment amount according to the euribor rate. therefore it turns out that by january 2010 i had even made overpayments.

in june 2010 they threatened that they shall proceed with legal measures if i don't sign and "readjust" our agreement.
the bank had never sent a written letter regarding arrears and its representatives always acted verbally.

when you say i defaulted, yes i didn't make monthly payments but i did "catch up" on all amounts by the end of the year, something the bank reps had never complained about.
so even if i defaulted, they accepted this "behaviour".

how can the bank get away with this? my naivety and ignorance are mistakes which ought to be reversible and not punishable. if this scenario stands, the bank shall make hyperprofits (they have increased their margin fraudulently by 4%). if my scenario stands (reinstating original agreement) they will still make a profit and no damages shall have occurred to either party.

they did hold a ''gun'' to my head by threatening with legal action (reposession and forced sale of house, declare bankruptcy)