Is your property in negative equity? Are you wanting to know what that means for your current and future circumstances?
Hopefully, this article will help you find out what this means for you and what affect it has on you being able to move home or re-mortgage.
What does it mean if your home is in negative equity?
Basically if your property is in negative equity it means it is worth less than the mortgage balance.
So if you have a home that has a mortgage balance of £125,000 and the market value of the property is £90,000, then your property is in negative equity.
Your property in negative equity, why?
This can occur for a variety of reasons. It could be due to you having an interest-only mortgage and so although you are paying a monthly payment to your mortgage company it is only paying the interest on your loan, not the interest and the value of the loan borrowed.
Another reason your property is in negative equity could be due to the property crash in 2008, which is still having an effect today.
Houses were bought at a very high price and fell in value dramatically over a short period of time resulting in a lot of households in negative equity.
What problems are caused by property in negative equity?
Negative equity is only a problem if you are considering selling your home or if you are considering remortgaging.
What are your options if you want to move home from a property in negative equity?
This depends on how much negative equity you are in. If you are up to date on your repayments on your current mortgage, have a substantial deposit for your new home and the value of the property you are moving to is not dramatically different a move can still be a possibility.
It is always worth talking with your mortgage provider as some companies allow you to transfer your negative equity to your new home.
A great option is going through a company that negotiates with mortgage companies on your behalf to help you get a reduced lump-sum settlement figure so that you can make plans for your future.
Contact us if you want us to put you in contact with a Negative Equity Negotiating Company we work with who will discuss your options with you free of charge
Please click on the banners on this page to make contact with certified companies that work hard to help you move on from your negative equity dilemma.
How to decrease the short fall with a property in negative equity?
You can reduce the amount your property is in negative equity by overpaying on your mortgage.
Also if you have any savings it is worth putting it towards the balance of your mortgage.
If you are on an interest-only mortgage it is worth considering switching to a repayment mortgage to reduce the short fall.
We hope this article on having property and being stuck in negative equity has helped give you an insight of what it means to be in negative equity and how to avoid negative equity.
If at any point you feel you are unable to pay your mortgage or if you are worried about your circumstances if interest rates increase do contact your mortgage company as soon as possible, as they may be able to help.