If you are a new homeowner then you might not of heard of the term negative equity. A huge issue during the 1990’s it seems with the recession over recent years that this is may now be a modern day one.
During early 2015 it was believed that around half a million homes in the UK are now worth less than their original mortgage cost. That is negative equity. A lower value of your house then what you borrowed. Probably not a major issue for those who are intending to stay in their property for a long time, but for anyone who has a view to moving home this may be an issue.
What can you do?
If you believe that your home is now fallen so much in value that you won’t be able to make back your initial cost then all is not lost. Although it may just mean that the process can be a little trickier.
One of the first things you should do is get in touch with an experienced estate agent (which is where The Manchester Estate Agent can help).
Can you get it out of negative equity
If you have had it confirmed by an estate agent that the expected sale price of your property now falls below that which you originally paid then one option that you have is to overpay your current mortgage so that the amount outstanding can be quickly reduced to meet the sale price.
Of course, this is only possible if you have the financial abilities or if your lender allows you to make these overpayments.
Getting a mortgage when you have negative equity
It is possible to obtain a mortgage specially designed for those people struggling with negative equity. However, they can be more difficult to secure and you may need to not only assure the lenders that you can provide a reasonable deposit but also that you can make the repayments that need to be made.
Different lenders will have different approaches to people who have negative equity and some may be able to offer you a mortgage that will cover not only 100% of your new purchase but also 25% extra that will cover the negative equity that you have in your current .
Although it is possible that if they do offer you this option, you may be given a higher interest rate on your future repayments then you would if you had a deposit to put down.
The fact of the matter is that if you find yourself in negative equity then you need not despair. Come to our experienced team at The Manchester Estate Agent and see if we can help you find your next new home!