# If Greece defaults



## dab (May 7, 2011)

Does anyone know what what will happen to mortgages in Swiss francs if Greece defaults?


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## wka (Sep 18, 2009)

What currency do you have? I presume that you would still pay in Swiss francs, just as you are now, exchanged from EUR (I assume). If EUR loses value against CHF, you would simply have to pay more EUR to meet your payment. If Greece leaves the Eurozone and returns to a national currency, you could pay with that but I suppose you'd probably need a lot more money in that case. Currently the value of CHF is up against EUR meaning that your payments will increase. Is it a fixed rate or adjustable rate mortgage? In the second case, your payments will increase also because the interest rate went up.

In the event that your currency (EUR or GRD or whatever it may be) loses value against CHF, you may find yourself owing more money than your property is worth here, or you may find yourself owing more money rather than less as time goes on. That is the normal risk that you assume by getting a loan in a different currency than the currency you earn. The big worry for you would be the value of EUR dropping in the event Greece or one of the other Eurozone countries defaults; or if Greece leaves the Eurozone, what would the value of the Greek currency be against CHF. Most likely significantly less than what it is now. 

If you think this is a real possibility, maybe you should refinance the loan. Not sure if that is possible for you but if you think a default (and leaving EUR) are serious possibilities, I would not like to owe money in CHF if my income were going to be in the currency issued by a bankrupt state. (In that event your best bet would be to default, I suppose.)

Just my opinion, I waited a few days in case anyone else more knowledgeable posted first, but since no one else has replied, well, those are my thoughts. Good luck.


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## dab (May 7, 2011)

Thanks for that thoughtful response. I am stuck with a chf mortgage because greece's alpha bank screwed up when I tried to convert it to euro two years ago. That cost me a bundle and my only recourse seems to be legal action and in Greece, good luck with that! I don't think anyone yet knows what is going to happen but the situation in Greece is definitely getting worse and something has to give. The people are getting restless and angry, the austerity measures are not working, the debt keeps mounting. Some kind of default seems certain. After that how can Greece stay in the euro?


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## wka (Sep 18, 2009)

A very big and open question right now is "What will happen to mortgages in Greece if Greece leaves the Euro?" Basically what every homeowner in the country with a mortgage wants to know is, will the loan still be owed in euros, or will the loan be converted to drachmas, and if so, how will that number be determined? 

The problem is that no one knows, and there are two "sides" that have started arguing that it will be the one or the other.

People who believe that the loans will stay in euros say that money that is borrowed in currency x is always owed in currency x, even if the country's currency changes. 

People who believe that the loans will convert say that the social upheaval from all the suddenly bankrupt citizens who have mortgages would force the government to require a conversion. 

It's very confusing. Even in the event that the loans converted to drachmas, there is the question of how would the conversion be carried out. Would they try to peg the drachma to the euro so the amount of drachmas you owed changed constantly depending on the exchange rate, or would they use a certain exchange rate and notify you that you know owe x amount of drachmas?

Then there are other issues, like yours with the CHF mortgage (which I have seen TV commercials for in the past month, they are still selling these, pretty sure it was Alpha Bank too), or in the case of public sector employees who have mortgages through the government program (they are in a position to say, how can you NOT convert our loans since YOU are the ones converting the currency). 

Not converting would devastate pretty much any family with a mortgage. Not something that bears thinking about.


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## parosred (Nov 18, 2010)

They would use a number for conversions just as they did when they went from drachmas to euros.


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