Property valuation and loan

[perestroikas]

I got a question.

i bought a unit at about 1.5 million at 80% loan. loan = 1.2 million
if the valuation of the unit declines by 10% to 1.35 million and the bank revalues the property and cap the loan at 80% ie 1.080 million.
does it mean that i have to pay 120k cash to the bank immediately? (1.2 million -1.08 million)??

[tericia]

I got a question.

i bought a unit at about 1.5 million at 80% loan. loan = 1.2 million
if the valuation of the unit declines by 10% to 1.35 million and the bank revalues the property and cap the loan at 80% ie 1.080 million.
does it mean that i have to pay 120k cash to the bank immediately? (1.2 million -1.08 million)??

based on what my banker tells me, yes, they can ask you to pay 120k cash to the bank immediately.

But whether they choose to or not, is another matter.

Hope that helps.

[rattydrama]

Let me try...If the valuation falls below 20% and that you have sign the loan documents, you will need to pay the difference.

At 10%, dont think the bank will call for top up.

[TS]

Technically they can. The garmen will "tell" them not to. If the loaner always pay on time (and with no bad credits rating), normally they will not want do that. Why open the can of worms if money is still being paid?

[kingkong1984]

They can pretend duno as long as u keep up to your payments. They will be busy with those who default.

[thomastansb]

If you are the bank, would you do it? Assuming the loaner pays up timely.

Loan is 1.2M. Force sell 1.35M or might even fetch 1.25M - 1.3M only. We assume times are bad and market is slow. After selling, owner left with nothing or even negative amount. Bank loses a customer and lose an income. The bank lose, owner lose, the next buyer wins. So why the bank do it? And also, during 1998 and 2008/09, there are so many properties dropping 50% in value but we don't see a lot of people filing bankruptcy. Obviously the Government doesn't want that. Maybe Singaporeans are very very rich but I don't think so. The bank is not stupid. Unless you screw yourself up with your late payment, you are fine.

I got a question.

i bought a unit at about 1.5 million at 80% loan. loan = 1.2 million
if the valuation of the unit declines by 10% to 1.35 million and the bank revalues the property and cap the loan at 80% ie 1.080 million.
does it mean that i have to pay 120k cash to the bank immediately? (1.2 million -1.08 million)??