Negative Equity
- The value of a property has fallen below the amount of the mortgage. This is said to be 'in negative equity'.
- This need not be a problem if the owner has no desire to move or sell and can still afford the mortgage
- The problems arise when the owner needs to move but cannot sell at a price sufficient to repay the mortgage.
- The prospect of buying an alternative home requires a deposit - normally procured from the sale proceeds.
- If there would be nothing left after selling the owner must wait until house prices rise.
- During a recession this might mean waiting years.
Published: 10 November 2013
Last Updated: 17 November 2021