What is negative equity?
Negative equity is the term commonly used to describe the situation of having a home that is worth less than your mortgage. The Quarterly Bulletin from the Bank of England has revealed that around 7%-11% of UK homeowners with a mortgage were in negative equity in the first three months of this year, owing more to their lender than their home was worth.
This works out to between 700,000 and 1.1 million householders in negative equity
Solutions
Help from your lender
ï,§ Contact your lender and ask if there are any new mortgage products to help with negative equity on your current home but which can be incorporated into a new mortgage product in the home you wish to move to. Some lenders may have packages for their existing borrowers but usually only if you have a good payment record. This is not necessarily a cheap option as the interest rate may be higher with the new product and there is likely to be an Arrangement Fee. Sustainability of maintaining mortgage payments on your new home needs careful consideration – payments will be higher than normal due to the extra mortgage from initial property being included.
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