Negative Equity revisited by this post in August 2011 with data from the Council for Mortgage Lenders CML. Recent reports and figures show you are not alone if you are in negative equity.
Who Has Negative Equity
- For information on negative equity see What is Negative Equity
- More than 7% of home owners with a mortgage have a loan bigger than the current value of their property.
- There are over 800,000 such properties in the UK.
Why has Negative Equity Arisen
- Collapsing property values have been the main cause of the gap between loan to value.
- Low deposit mortgages and lack of original equity in a property is also a major cause.
- Negative equity would be worse if the interest rates were not so low and more people were in default.
- In the early nineties there were over 1.5 million in negative equity but until the recent slump these numbers had almost been eliminated.
What to Do in the Negative Equity Trap
- If you can ‘keep on keeping on’ there is no cause to worry. Eventually your negative equity will be eliminated.
- Do not get worried and flustered just by negative equity. You are not alone! The negative is not crystalised whilst ever you continue to pay your mortgage.
- You may find it hard to remortgage to get a fixed rate deal if you have negative equity but shop around. There are negative equity deals around but they are expensive. See Halifax web site.
- Some lenders allow you to port your mortgage if you are forced to relocate for work reasons.
Comment from Housing Market
- If you have a joint ownership and negative equity take this into consideration in the event you split up. An equity surplus would be shared so should an equity shortfall.
- The crucial issue is keeping up with the regular repayments. You entered a contract to do that and as long as you maintain those payments any negative equity is only notional.
- A property is worth what someone is willing to pay and negative equity can only truly be calculated on sale.