What are your experiences with Negative Equity...

wymondham

mpsavuk wrote: »

Negative equity is only a problem if:

You need to remortgage
You are being repossessed
You really need to move (Change of job etc)

What about if you become too sick to work, or get injured?
it's the unexpected things I was pointing out. I understand those saying not to worry about it and managing risk etc, but there are an awful lot of people currently going through the buying process knowing from day one they probably can't afford to sell it if they need to, and this is seems odd behaviour as this is entirely avoidable...

thanks for all the replies to date, some good stories.. keep them coming. Hopefully people will read and get a feel for what negative equity does to you in the real world....

geoffky

I Lost 50k And Took Me Ten Years To Recover..I was living with a girlfriend at the time and i got made redundant four times (with no payout as had been there less than two years) and in the end the keys got handed back and i was chased for ten years until i paid it back..

neverdespairgirl

ms.prong wrote: »

There is nothing wrong with Bracknell!

There's a lot wrong with it. It's a sort of concrete wasteland.

I used to go there a lot, 2-3 times a week for 7 months, when I was a pupil barrister (Magistrates' Court in Bracknell).

There is the world's slowest train from Waterloo, then when you get there, you trek through that awful concrete shopping centre, full of pound shops, fast food outlets, and nowhere to buy lunch without putting on half a stone.

moggylover

I bought my cottage here is 1990 for £42,000. Within 6 months it was probably on worth about £30,000 - and it was semi-derelict and actually not particularly habitable. The relationship I was in at the time of buying it got into difficulties and I wanted to sell - but would not take the financial hit. I got on the list for a grant to help renovate it (took until 1993!) and did it up - and have lived here ever since. Mum died recently, and finally have the chance to move to a bigger house (only have two beds - and sons are now of an age to need separate bedrooms) but guess what: I am once again in a rotten market to try to sell in and have had to reduce the house from the price that a similar one went for last year to what I could easily have got in 2004! Also, trying to sell TWO houses in the current market is no joke. Nevertheless, when it is meant to happen it will - and there will be somewhere wonderful just waiting for me to buy and that will have had to come down in price as well!

If you HAVE to move in a time of negative equity then imo the way to go is to rent the place out and rent at the other end, and wait for things to improve. It may seen like a long time - but it does happen.

Also, if you get sick or injured then there are benefits to help you to pay your way until you can get a new job.

Nothing is insurmountable - you just have to look hard for the answers sometimes.

kunekune

In August 1997 we bought a lovely house in Auckland for $295,000. I was working a couple of hours away, but it seemed likely I'd be able to get a job in Auckland, so we put up with me being away 4 days a week. First, the interest rates went up: we got lodgers. Then, after two rejections for the job in Auckland, I got pregnant in the autumn of 1998 - an accident, for those of you who love to be rude. Hubby managed to get a job closer to mine, we tried to sell the house. Two months on, no interest, so we rented out the house (rent enough to pay OUR rent) and moved out.

First tenant was a con woman. We didn't lose too much (and she ended up in prison, but that's another story). Switched to an agency and got a group of quite reliable techies in. Baby arrived. Baby disabled, in need of more care than most babies, and with a lot of hospital appointments. While I was on maternity leave (unpaid in NZ at the time) we moved again, so we were close to hubby's job. On one income, we could pay the mortgage so long as the rent carried on coming in to pay our rent, but it was tight. We concluded that my old job wasn't going to work out, and I managed to get one in Wellington (a better one, too!). Giving up work to look after baby was not an option, with a 90% mortgage on $295K.

All this time, the market was stagnant and prices were falling. There was no chance we could sell the Auckland house. Unexpectedly, we found ourselves in the position to pay the 20% deposit on another (cheaper) house in Wellington, and after repeated difficulty with landlords and houses that weren't safe for a small disabled child, we bough again. We now had two houses, two mortgages and a set of tenants. We managed to keep it all up, tried to sell the next time we had a void but again failed and got tenants again.

In 2001 I became pregnant again, this time on purpose. The house was empty for two months and we had an invitation to take part in a reality tv show where your house is done up and auctioned. We did that when baby 2 was just 3 weeks old. It didn't sell, but we were able to put the rent up! These tenants stayed about 9 months, and then gave notice. We put the house back on the market, and this time we decided not to give up.

The house sold in September 2002 for $245,000. Remember? We had paid $295,000 for it. The equity paid the mortgage off but we had to mew on the new house to pay the estate agent (about $17,000, they are more pricey in NZ). A month later, the market took off. Recently, a house like that would have fetched around $500,000!!!!!

We were silly at various times, and there were things we ought to have done differently, but it's useful to remember that this can happen to people who can afford the mortgage (we never missed a payment) and who had a reasonable amout of equity at the start.

PasturesNew

Panorama TV Programme from 1995 showing you people in negative equity:
http://www.bbc.co.uk/mediaselector/check/bristol/realmedia/092007/bs_panorama?size=4x3&bgc=C0C0C0&nbram=1&bbram=1

And more recently, on the radio this week, speaking to people who lost their houses in the last crash
http://www.bbc.co.uk/mediaselector/ondemand/worldservice/meta/tx/outlook_mon?bgc=003399&nbram=1&lang=en-ws&nbwm=1&ms3=6&ms_javascript=true&bbcws=1&size=au&ls=t546

PasturesNew

In about 1990 or so I bought a 50% SO house. It was nice, bed on a balcony style, but it was a little house with a little garden and although it was in a council Close, there was only really one early-20s ruffian and he was not near me.

It was the only way I could have afforded somewhere and it was 2-villages-distant from the town but I had everything I needed and expected to stay there for life.

Things always change. My family all moved away over 300 miles and were putting pressure on me to move "you've nothing there" they said, so when the company I was working for was closed down and there was an outstanding courtcase with a rogue employee (which had caused the closure) and the rogue employee knew where I lived and had already issued death threats, I decided to dash off over 300 miles away for a new start.

My SO deal said I could sell back to the Council, so I did. It was 1997 and I was still in 5% negative equity. Luckily I happened to have this much sitting in my bank so I wrote a cheque out to settle that. Having said that, at the time I was only allowed to borrow about 3x my salary, so no "silly lending" multiples.

What people forget is that along with negative equity comes job losses and I was hit hard and repeatedly with these from about 1988 ... in fact, that poor start to any form of a career pretty much did for me for life I suspect.

IveSeenTheLight

neverdespairgirl wrote: »

Or if they want a new mortgage deal, rather than being on the Standard Variable Rate?

If you are worried about this, then maybe the time is right to secure on a long term Fixed Rate deal.
I read the other day that Woolwhich were offering a 5.97% 10 year fixed rate deal

Pobby

PN thanks for the bbc link. Watching it now and it`s very scary. Strange that years later I still wanna give Thatch a slap.

Anyway doesn`t it echo what is going on now. House prices always go up, yawn, yawn. Oh someone has just said you have to save up a deposit. Well, well.

Obviously the folks of Bradley Stoke are at it again.

http://www.rightmove.co.uk/viewdetails-21690116.rsp?pa_n=1&tr_t=buy

Am I right in thinking that these were going for just over £50k.

Good job it`s different this time.

Incisor

pinkshoes wrote: »

So basically you agree then, and are arguing the same point?

Indeed we didn't overstretch ourselves, we put down a decent deposit, and we bought because interest on mortgage was cheaper than renting!

I guess if we wanted to move and had negative equity, we'd just rent it out instead of selling.

I've been through a lot in life, and have come to realise that money has very little significance in life if you live within your means.

Mostly arguing the same point. However, I did feel that you were presenting Negative Equity in rather simplistic terms as being 'one of those things' that might strike you in the way lightning does, ie your choice is stay in or go out, take it or leave it. And I felt that it needed to be presented as the consequence of a range of choices rather than something you either accept or don't.