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.
Comment on 'Investor' is a dirty word for first-home buyers — but are they the real villains?
Taleya@aussie.zone 4 weeks agoNegative 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
Pregnenolone@lemmy.world 4 weeks ago
null_dot@lemmy.dbzer0.com 4 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.