Is Your Property In Negative Equity?
Negative equity can leave you feeling trapped. However, there are solutions. Find out how the UK’s leading property debt experts can resolve Negative Equity.
The best way to find out how we can help is to get in contact. Request a callback.
Concerned about debt? We understand that taking the first step can often be the hardest.
Reach out to us today for a free case review with one of our experienced specialists.
Negative Equity is simply when the sale value of your property is less than the remaining mortgage. Most negative equity issues stem from the 2008 financial crash. Although many assume this problem has gone away, it still affects over 500,000 people in the UK.
Negative Equity often lies dormant for many years as it does not have the same urgency as other property debt issues. However, this does not mean it is any less serious, negative equity can be a burden on your finances. The sooner it is dealt with, the easier the resolution.
Why is Negative Equity an Issue?
Negative equity is not always a serious issue. If you plan to continue living in your house and can pay the mortgage it may not have a severe impact on you.
However, for many this is not an option. If you are struggling to meet repayments or if you want to sell your house it can bring serious challenges. This can cause you to end up ‘trapped’ in negative equity – unable to sell and unable to meet repayments.
If you sell your property, you will be required to pay the mortgage shortfall. Unless you have a large cash reserve or other assets to cover the cost, this for many, is not a feasible option.
If you continue living in your house and you’re on top of your mortgage payments, you will not face any consequences. However, there is always the risk that a sudden loss of income could leave you unable to pay your mortgage and cause a significant shortfall. As mentioned above, you are liable for the full value that is remaining.
You can attempt to wait for house prices to rise to the same level as when you first purchased your property however, this could take years. If there is a substantial amount of negative equity or you purchased pre-2008, this is unlikely to ever happen.
Selling In Negative Equity
There is a common misconception that you cannot sell in negative equity. However, this is not the case. It does make the process more complicated but it is not impossible. Before selling, you need to consider the difference between the sale value and remaining mortgage. When doing this, you need a realistic valuation of the property and, take into account sales costs.
This process involves negotiating with your mortgage lender to allow the sale of your property to a third party. This can be an option if someone you know wishes to purchase the property or you want to manage the sale yourself.
After the sale you will still have to pay the mortgage shortfall however, this can be negotiated. These negotiations require a good understanding of how banks operate, how to deal with them and the evidence required. Therefore, we always recommend seeking expert advice before attempting to contact your lender.
Extremely professional service
Extremely professional service from start to finish. The team at Bell & Company were empathetic to my situation and extremely efficient in implementing the strategy devised at the onset.My case manager was always at the other end of the line…
Extremely professional service
Robert – GB
“Are There Any Other Options?”
If the above options are not possible routes for you to go down, you can voluntarily surrender your property. This process involves the repossession and forced sale of your property by your lender. The money from the sale is used to pay off the mortgage and you will receive anything left after this sale. You will still be left with a shortfall that you will need to pay if the property is in negative equity.
Generally, the lender will force the sale at below market price. This means that the shortfall from the sale will be larger than if it was sold via other methods. But, if you cannot pay the mortgage and cannot find a buyer this is an alternative.
No matter which method is best for your situation, we always recommend consulting property debt experts first. Bell & Company have been resolving negative equity cases with our sister company EU Property Solutions for nearly 15 years.
If you are worried about negative equity or, you are struggling to pay your interest-only mortgage, get in contact with our team today. Our property debt specialists can provide a free full case review and get you the solutions you need.
Contact us today to speak to a debt specialist.
"*" indicates required fields