7 Mistakes That You’re Making With Negative Equity

7 Mistakes That You’re Making With Negative Equity

  • 7 Mistakes That You’re Making With Negative Equity

    Until the late 2000's, few of us had heard of negative equity. Back then, we were all too busy watching property prices rocket, counting the thousands our homes were adding on a weekly basis.

    So its not surprising that even though today around 44% of homeowners across the UK,  find themselves in negative equity, few people know what to do about it.

    Its even more understandable when you factor in all the bad advice that many people were given back then too: yes, sure you can borrow more money against your house prices may level out but they certainly wont fall. (famous last words).

    So its no wonder that lots of people who took that advice through no fault of their own or bought at the top of the market, now owe more than what their house is worth.

    With so much misunderstanding of negative equity and mistrust of the lenders its not surprising people make mistakes when it comes to putting things right.

    These are the top 7 reasons we hear every day from our clients about why they put off dealing with their negative equity – don't make the same ones!

    1. Thinking you cant do anything at all

    There is a solution to almost every problem. That's how we came up with the idea of Negative Equity UK. We saw that people were trapped by negative equity and we also knew that the banks would struggle to deal with the issue. So we put a team together of banking and debt experts and came up with a plan an ethical, regulated solution that would be in the interests of both the homeowner and the lender. Our confident, positive, can do approach gets £100,000's written off every day for homeowners across the UK.

    2. Sitting tight until prices go back up

    Depending on your level of negative equity, you could be waiting a long time. Those with negative equity in the thousands may begin to break even over the next few years. Those with negative equity in the 10's or 100's of thousands will have much longer to wait. House prices at the peak were unsustainable and so unlikely to hit those levels again any time soon perhaps not even in our lifetimes.

    3. Struggling pay that self-certified or interest only mortgage

    If you're in negative equity AND have a self-certified, interest only mortgage, spending most of your income to meet the repayments may be like throwing good money after bad. The negative equity gives us strong leverage to negotiate a write down with your bank. Being self-certified also may bring in issues of affordability, while at the end of an interest only mortgage term, you're still going to owe the original sum of capital borrowed. How much will that really all cost you?

    4. Ignoring the situation

    You can stick your head in the sand and hope it all goes away. Which would be great if life worked like that Unfortunately it doesn't. This strategy can become a real problem if you get into arrears the bank will quickly start sending letters and threaten court action. Even if you do reply and try to put a case, its unlikely they'll listen to you.

    They do, however, listen to us.

    5. Putting your life on hold

    Being trapped in negative equity is much more than a financial problem. It can affect your whole life and that of your family. Say you want to get married for example, but cant buy a family home because one or both of you already have a property that's in negative equity. Say you'd love to have more kids but don't have enough bedrooms and cant sell up because you'd lose a fortune? Say you've just retired and want to downsize but the negative equity would eat up all your savings?

    Life's too short to be held to ransom by the highs and lows of the property market.

    6. Carrying around mortgage debt.

    So, you managed to offload the house, but the lender still wants the balance of what they're owed after a shortfall sale. You probably now have rent to pay and moving costs plus still service your mortgage. Continuing to pay for something you no longer own makes no sense at all

    7. Not getting professional help.

    This is a biggie we hear from people. People think that our service offering is too good to be true. But, the proof's in pudding. Get in touch immediately and speak to an expert!

    This article was posted in Property Debt Mortgage Debt England and Wales