Back to Blog Posts

What Can I Do About Negative Equity

During the recession many homeowners within the UK were at risk of repossession as they couldn’t afford repayments on their home. As well as this due to the sudden fall in house prices, many people found themselves in negative equity, as they owed more to their mortgage lender than the value of their home. Towards the end of 2001, there was a huge 1 in 20 homeowners in this position, with another 16% at risk. Having negative equity can be frustrating and upsetting especially when you have put so much work into your home so far, but generally it isn’t a problem until you come to put your home up for sale.

In most cases the best option is always to stay where you are and aim to pay off your mortgage. Within time, house prices may rise potentially reversing the process, and you will have also paid more towards your mortgage, putting you in positive equity, so don’t be hasty in selling your home unless you have to, and then you could opt to sell your house quick. If you have any debt, you may also be trying to juggle keeping up the repayments on your home as well as paying off your debt. In this instance it is always a good idea to use any savings you have to pay off your debt, particularly as mortgage rates always tend to be better than savings rates. Your money is therefore better off being used to pay off your mortgage or any arrears as opposed to leaving it in a savings account. Check with your mortgage lender about any penalties you may incur through paying off your mortgage early. Most lenders will allow a certain amount before any charges apply, so be sure to check first.

If you find yourself having difficulty keeping up your mortgage payments you may feel forced to sell your home. In this situation you may wish to sell house quickly in order to avoid the consequences of repossession but it can also prove to be a problem if you have negative equity. Whatever happens it is important that you get professional advice from someone who can help you in this situation. If you choose to have a quick home sale, you may be able to pay off any shortfall to your mortgage lender over time, but you will need permission to sell your home at a rate lower than what your outstanding mortgage amounts to. Bear in mind that you will have the expense of moving to deal with which could prove costly, so it’s a good idea to weigh up which is better for you. Certainly don’t be hasty in your decision.

You do have the option to allow your mortgage lender to repossess your home but this is highly advised against due to the negative repercussions. Many lenders will sell your home at auction which also attracts lower bids, therefore in most cases you will end up owing your mortgage company a lot more, and don’t forget your credit rating will be seriously affected making it difficult to get another mortgage or any kind of credit in the future.

by Cormac Henderson

We have various options for a quick sale – Click Here for more information

Considering using an Estate Agency? Try Sell Simple Estate Agency

National Property Trade is rated 4.90 stars by Reviews.co.uk based on 231 merchant reviews

4.90 / 5 Rating
231 Reviews
We received an excellent service using the Assisted Sale product and we would highly recommend anyone seeking a quick house sale to consider this option.
We sold our bungalow using National Property Trade and had the pleasure of dealing with Samson. Very straight forward and without hassle which is exactly what we were looking for. Being sceptical of most property buying companies online, National Property Trade happily answered any questions put to them and were very open and honest from the start. You have broughr bright light to our lives in difficult circumstances and without you guys we would be lost with you. Many many thanks.
Excellent service received and we would like to say a big thank you to Samson for all his hard work and professionalism.