Negative Equity

What is negative equity?

Negative equity simply means that your mortgage is higher than the value of your property – and this can be influenced by the state of the housing market and the financial and economic climate. If you wish to sell your property, negative equity can be a concern. If, however, you are up to date with your mortgage and secured loan repayments, negative equity should not be considered as an immediate problem.

If you are concerned by negative equity contact your lender directly as they will be able to explain this to you.

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Who does it affect?

Negative equity is where the value of the house is less than the mortgage and/or secured loans on the property.

For example – House valued at £250,000. Outstanding Mortgage £275,000. Negative Equity would be £25,000

The person/s named on the mortgage would be affected by negative equity.

How can I found out if I’m in negative equity?

You can ask a local estate agent for a free house valuation and providing you know how much is outstanding on the mortgage (your Lender can confirm this for you), you can work out if you’re in negative equity. There are also several websites which can give you an estimated value for your property – Rightmove or

Should I be worried?

If you’re not planning to sell your property then it shouldn’t be an issue if you are in negative equity. If you were trying to sell it is possible for the mortgage lender or the secured loan lender to prevent the sale on the basis that there wouldn’t be sufficient money from the sale to pay the mortgage and/or secured loan and the sale may not proceed. Your lender may agree to allow you to sell but may transfer the negative equity amount to your new mortgage.

What can I do about negative equity?

Depending on your situation, if you are able to overpay on your mortgage, this would reduce the outstanding balance sooner and ease the negative equity in your property.  Check with your mortgage lender about this first.

You could choose to rent your property out, subject to approval of your mortgage lender, and if the rent exceeds the mortgage payment, this could give you extra money (after tax) to pay towards reducing the outstanding mortgage.

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