If you are in negative equity, you are not alone. According to some estimates, more than a half million people are afflicted with the same situation. Negative equity is when you owe more on your house than it is worth, and it can make selling your home difficult. What are your options if you find yourself “underwater” with your mortgage.
First, can you sell your home if you are in negative equity? Yes, you can. However, carefully consider the ramifications of doing so. You’ll have to ask your lender for permission to sell for less than the amount you owe. If they agree (and most will be fair), you then have to pay off the shortfall.
Say, for example, that you owe £130,000 on your mortgage, but you can only sell your house for £110,000. You must pay back the remaining £20,000 over time. Remember, too, that you’ll have to find and pay for a new place to live.
Whilst possible, selling while in negative equity is far from an ideal situation. You could also stay put for the time being and work on reducing your debt. “Negative equity” sounds scary, but it’s really only an issue if you want to sell or borrow against the value of your house.
If you can remain in place, you can pay off your mortgage slowly. Making larger payments or a 13th payment each year can help accelerate the process. And, in a few years, the market may have rebounded in your area and raised prices. This could bring you into positive equity.
If you’re in negative equity, consider staying in place. If you must move, contact our estate agents for assistance. We can help you get the best price possible.