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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