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Old 23-02-2012, 05:24 PM
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Default Extortionate rate rise on mortgage in Latvia

Hi, here is a pretty awful experience I went through with UniCredit bank Latvia that I wouldn't want anybody to have to go through. Do take care if you are in this situation. It could cost you dearly.

I have a mortgage with UniCredit for a property in Latvia. Recently I faced payment difficulties due to losing my job and falling rents. I asked the bank to see if they could suggest a way out otherwise I face default. They said they can help by offering me a temporary interest only period. On condition that interest rates are increased to be able to benefit from this concession. I was reluctant about the rate rise but figured interest only with the rate rise is still lower monthly than full repayment until I get my feet on the ground. So accepted the proposal.

All went well until the interest only grace period was up. To my horror I realised they had permanently increased interest rates. Not just for the interest only period. So it wasn't for the duration of the grace period but to the entire loan until maturity in 20 years.

I calculate this will cost me about 300 extra each month from now.

I tried to argue that since there was no additional borrowing, no extension of the morgage term it is quite unfair to do this to someone in a difficult position. There is no justification to permanently increase rates. I didn't read the small print and was in a rush to sign. They just throw it back in my face and seem to say too late, you've signed.

Has anybody been here before? What did you do?

If you are considering "assistance" from your bank watch out of onerous terms.
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