The FSA has warned consumers about the risks of remortgaging to fund investment in overseas property development following reports of timeshare owners being targeted to invest such schemes.
The regulator says it is concerned investors are being advised to take out a mortgage secured against their property to fund an investment in overseas development.
The FSA says it has received reports that potential investors, particularly timeshare property owners who have signalled they are open to selling, are being approached to invest in the building of an overseas eco-resort development.
Potential investors have been invited to seminars where they are offered money for their timeshare in return for a much larger sum being invested in the overseas development.
The FSA says: “Taking out a mortgage secured against your home to raise funds to invest in other property carries significant risks. You could even lose your home if the investment fails and you are not able to keep up repayments.
“You should be aware that an investment in an overseas property is not regulated by us so you will not be protected by the Financial Ombudsman Service or Financial Services Compensation Scheme if things go wrong.”
The regulator adds if consumers think they have been missold a mortgage in order to raise money for a property development they should complain to the firm involved.