Homeowners looking to refinance could be shocked to find their mortgages underwater, it has been claimed.
Comparison site Rate City has warned that borrowers in hard-hit property markets could face a "nasty shock" when looking to refinance. The company's chief executive, Damian Smith, said some high LVR borrowers could find themselves in negative equity.
"Some homeowners and investors who borrowed 95% or more of a property's value - particularly those in some of the hardest hit suburbs of Adelaide, South East Queensland and Perth, may now have mortgages that outweigh their home's value," Smith said.
Smith said high LVR borrowers in depressed markets may find themselves unable to refinance.
"The good news is that the rate cut earlier this month will likely be passed on by most lenders, wiping around $50 per month off the average-sized home loan repayment. By keeping repayments at the higher level - rather than spending the extra money - borrowers will reduce their debt sooner and get back into a better mortgage situation," he said.
Can you afford to buy in this suburb? Find out how much you can borrow
Top Suburbs :
st kilda west
Get help with your investment property
Do you need help finding the right loan for your investment?
When investing in property, it is important to make sure that you not only have the lowest available rate that you can get, but also have the correct loan features for your needs.
Just fill in a few details below and we'll then arrange for a local Aussie Mortgage Broker to contact you and work out what features or types of loans are right for your needs. We'll even help with the paperwork. Plus and appointment is free.
We value your privacy and treat all your information seriously - you can check out