Negative Equity

hummy

Can anyone give me the ins and outs with regards to negative equity. My property seems to have been valued at least 20K below what i paid for it. I'm looking to sell and the offers i'm getting are reflecting this price. I really depsperatley need to sell since this property is becoming a burden on me.

I wanted to find out how bad a position negative equity is and what i can do to try and reduce the affects it has on me. Can someone explain to me the full ins and outs of negative equity and the main points about the mortgage company claiming back the amount owed.

Thanks

cattie

I'm not sure if it would help if you gave some idea of location & type of property, ie newbuild & how long you have owned property.

It seems some newbuild properties have a much lower resale value when vendors come to sell, especially apartments.

Sorry to hear you find yourself in such a situation & hope a more knowledgeable person than myself can give you some good pointers to minimise the damage.

pawpurrs

As i understand it you will only be in negative equity if what you actually owe the bank is less than what you will get for it, irrelevant of price you paid for it.
If this is the case then in order to clear your debt to the bank then you will need to find the shortfall.
How come it is worth less than you paid for it, did you pay too much and have a 100 % mortgage?
If it is in negative equity, could you rent it out, and would this cover your mortgage payments? If so then this could be an option for you, and sell at a later stage, when hopefully it may have increased in value (obviously not guaranted)

homer_j_3

you will still owe the money to the lender and unless you can come to an arrangement to pay they may not release their charge from your property until the debt has been cleared.

If they wont provide clear title then you will not be able to sell.

Do you have to sell, is their a reason why it has been down valued so much? You would be best keeping it on if you can afford until you get out of the negative equity situation - if you can,,,

Guy_Montag

I hate to say it, but you should have listened to those clever, beautiful, witty, sparkling people at HPC/GHPC

hummy

sorry for the ignorance but what is HPC and GHPC.
Thanks

Guy_Montag

Rival websites that consider the property market to be ovevalued & that we're due for a crash.

On a more serious note - you should probably post more details. type of house etc.

But the way I see it, you have two choices:
1) gamble on waiting, you might get the full value back
or
2) take the hit & get out while the going's good.

p1an0player

HPC
housepricecrash.co.uk

not sure about GHPC

jpwrac

Ive just bought a house, fixed rate 5yr with Northern Rock. I'll be receiving about 20 grand in a few months time, is it best to pay this off my motgage and lower my payments, or invest it in an ISA or something and wait for the fixed period to elapse and pay it off when I get a different mortgage?
jp x

A_Nice_Englishman

jpwrac wrote:

Ive just bought a house, fixed rate 5yr with Northern Rock. I'll be receiving about 20 grand in a few months time, is it best to pay this off my motgage and lower my payments, or invest it in an ISA or something and wait for the fixed period to elapse and pay it off when I get a different mortgage?
jp x

It depends a lot on what penalties (if any) NR will impose. If you can give details of these people may be able to advise.

Gorgeous_George

If you wish to buy another house, you may be able to take any negative equity with you i.e., take out a mortgage at more than 100% LTV (loan to value). Not ideal but many people were in this position in the early 90s.

If house prices crash, as many people hope, you will not be alone. If they rise, your negative equiyty could be cleared.

If you would like to stay in this house, can you get a good deal for a mortgage. Tied in for 10 years at less than 5% should prove a good move.

My advice would always to buy a house that you would like to live in for the long term. Not always possible, I know, but then, it's not always a good thing to buy a house. If you cannot afford the house that you'd like to live in for 10 years, I'd sooner rent.



GG