Comment on 'Investor' is a dirty word for first-home buyers — but are they the real villains?
null_dot@lemmy.dbzer0.com 5 weeks agoThat’s not really how mortgages work.
If your house is worth less than your mortgage the bank can’t just ask you to cough up. That’s absurd really.
It’s just that if you sell you can’t settle the mortgage with the proceeds.
Taleya@aussie.zone 5 weeks ago
Negative equity is absolutely a thing - and if a property with a 900k loan drops to 650,000 for example, then banks consider it a risk
null_dot@lemmy.dbzer0.com 5 weeks ago
I’m not disputing either of those points.
This is absolutely false.
Some loans, “margin” loans, do work how you say and the bank will make a “margin call” asking the borrower to repsy a lump sum to reinstate the margin. However, this type of loan is not generally used to buy residential property.
Pregnenolone@lemmy.world 5 weeks ago
They’re not saying it’s not a thing, just that banks don’t call in the mortgage just because you’re in negative equity. It’s a problem if you try to borrow more or refinance.