While a lot of people in capital cities have enjoyed capital gains recently, not everyone has been so lucky. A few years ago, anyone that bought real estate in mining hotspots through Queensland would have seen astronomic price rises, but now the bottom has fallen out of the market.
For example – Residex data shows that in Mackay, median house values dropped by 12 per cent over the year to August. For units, this was 7 per cent. Where people might have bought a house valued at nearly $430,000, it could now be worth barely $300,000.
This means people can owe significant amounts of money to the bank that can't be repaid when a home is sold – what is the solution?
The local big short?
In the United States of America, when a home loan is called in and the property value no longer covers what is owed, they will take the shortfall. Over here, the home owner can be liable for this money.
It means that those who have bought a home that dramatically drops in value have to come up with tens of thousands of dollars (and often more) to complete their mortgage. Obviously, this is a precarious and difficult situation – one which often leads to banks pursuing legal action to recoup their money.
Fortunately, there are ways that you can seek help.
Use the professionals
At Cactus Consulting, we can help with a wide range of individual debts, both big and small. Even if your creditor is a bank and you owe a significant amount on a mortgage that the property won't repay, there are solutions.
Property markets work in cycles.
We can negotiate with banks on your behalf to establish an informal arrangement or payment plan. We could assist you in establishing an alternative line of credit that is more feasible for you, while also satisfying the bank's demands. Failure to be proactive and address these situations can lead you down the road to bankruptcy – get out ahead of the problem and speak to us.
Property markets work in cycles, and where one area drops one year, it may rise a few more down the line. However, that doesn't mean continually paying your home loan is tenable for that period. Speak to the personal insolvency and bankruptcy specialists at Cactus Consulting if your home has depreciated significantly.