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Negative equity is only relevant when one needs to sell the property.
by vonmoltke 8y ago
Negative equity is only relevant when one needs to sell the property.
- refurb 8y agoLike when the economy crashes and you lose your job. It’s amazing to me that only 11 years ago the world say one of the worst housing crashes in a century, yet people think “it’s different this time” and keep pouring money into an already overheated asset. It’s going to be interesting!
- jypepin 8y agoI agree with you but it depends on the market I guess. Europe doesn't have a housing/mortgage that is as volatile and "extreme capitalist" as the US. Much more regulations around banking here.
- refurb 8y agoMaybe you mean not any more? If I remember correctly, Ireland housing got absolutely hammered in a way that was at least as bad as the worst areas of the US (Miami, Las Vegas) back in 2008.
- short_sells_poo 8y agoThat's untrue and bad advice. The reality is that it depends (from country and bank), but often banks will have a margin call clause in the contract. In my experience they almost always have such a clause to cover their own ass. They'll not use it for relatively self contained cases, but when the shit hits the fan and there's a 2008 style downturn, they will, because they want to protect their balance sheets. This clause will then hit you at the worst possible time, when the economic situation is just bad everywhere and you'll be expected to prop up your mortgage, only you can't if you have no cash and nobody will lend you because you are in negative equity.
- jypepin 8y agonot in europe afaik
- tathougies 8y agoIf banks in your country do not have the ability to make margin calls while simultaneously making 0% down loans, you should probably think twice about putting your money there, because the moment they go belly up, your savings will be gone. Or, if your gov't guarantees savings, then expect massive inflation.
- refurb 8y agoOr if you need/want to refinance.