Sitting here on this grey day I am thinking about worst case scenarios...
I know I should know the answer to this question but:
Lets say you have an IP purchased this year for $500K. For simplicity, lets say this is your only property.
You took out an 80% loan for $400K with one of the big 4 banks.
They doomsdayers were in fact correct, the bottoms falls out of the market and the IP is now down 30% in value. New value is $350K.
So, you have negative equity.
Are the banks concerned with this? As long as you keep making the mortgage payments are they happy? I assume that foreclosure would only occur if you default on the mortgage payments.
Is this correct?
Many thanks,
Graham
I know I should know the answer to this question but:
Lets say you have an IP purchased this year for $500K. For simplicity, lets say this is your only property.
You took out an 80% loan for $400K with one of the big 4 banks.
They doomsdayers were in fact correct, the bottoms falls out of the market and the IP is now down 30% in value. New value is $350K.
So, you have negative equity.
Are the banks concerned with this? As long as you keep making the mortgage payments are they happy? I assume that foreclosure would only occur if you default on the mortgage payments.
Is this correct?
Many thanks,
Graham