Negative Equity - What are our options?

Posted on 28 August 2012 by Chris

My wife and I bought a house for £110,000 back in 2004 using a NRAM together 100% mortgage. After a few years of increasing house prices we remortgaged at 130,000 (the house was values at 140k) it now seems that due to the decline in the housing market that our house is probably worth 110k at most, leaving us in 15k or so of Negative Eq. What are our options - we really don't want to live here anymore?


Whilst you are in negative equity there is very little you can do.  If you haven't done already you should speak to your mortgage lender.  Ask what schemes they have in place for helping borrowers in negative equity.  They may be willing to let you sell it and carry forward any shortfall in the debt to your new property or they may accept a lower amount to repay the mortgage in full and write off any shortfall. If they prove to be inflexible you may be able to obtain an unsecured loan to repay any shortfall.  An unsecured loan would be more expensive, but your new property would not be at risk.

If you can not sell the property and come to an arrangement regarding the shortfall you may still be able to let the property and move into rented accommodation yourself.  You will need to get consent from your lender and there will probably be an administration fee to pay.  If you have never let a property before, I recommend that you speak to at least 3 different letting agents about what you can expect and your duties as a landlord.


Answers provided in response to Ask the experts are based on the information provided and do not constitute advice under the Financial Services & Markets Act. They reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them.

We recommend you seek professional advice with regard to any of these topics where appropriate.

You are currently offline. Some pages or content may fail to load.