There is no typical Negative Equity UK client. Each is an individual, so he/she is unique. There may be similarities in their stories and experiences, but there are many, many differences, too.
In our experience, no two stories are identical. Why? Because no two people are identical. So in trying to highlight the overall problem of negative equity we are limited to making sweeping generalisations, looking at the things people have in common and citing similarities in their circumstances. It is only when we sit down with a client or clients to examine his, her or their personal case that we get to know that man, woman or couple, their particular situation and the real details and true extent of their wants and needs.
They are likely to have bought their home during the UK's property boom. Between 2004 and 2008, house prices went through the roof. And hand in hand with that, market-driven property valuations soared, too. Money appeared to be plentiful, though the truth of the matter is that we were borrowing as never before and the manner in which loans were being handed out merely added to our problems rather than solving them. No-one will have forgotten the almost daily routine of credit cards offers arriving on our hall mat at that time.
In the circumstances, mortgage advice really did not appear to be all that important, if indeed it even applied to us. Small print? Details? Particulars? Humbug. If anything went wrong we would get another loan elsewhere. After all, weren't the banks queuing up to help us?
Interest-only loans sounded like a great idea in that they were cheaper. So we put a wee plan in place to clear the capital we had borrowed. What could go wrong?
And then the economy hit the buffers. The property boom ended and property valuations became a little more realistic as house price increases at first stopped and then went into high-speed reverse. Negative equity had arrived. The crows of what happened in 2008 continue to come home to roost. Even now there are 100.000's cases of negative equity in the UK. But many of those hundreds of thousands now need to move because their circumstances are much changed from what was the case when they bought that property. Then it was valued at £225,000; today its worth £140,000. That's £85,000 of negative equity. And if it was an interest-only mortgage, the capital must be repaid, too.
Since buying that three-bedroom home, however, you have had three children, so its no longer big enough for you and your family. You need more space, so you need to sell. But because you are in negative equity, you cant. Or it may be that your marriage has ended and you have either divorced or are in the process of divorcing so the house you bought together now creates a problem. Either it is sold or you buy out your former partners share. But that will require a new mortgage deal and banks are not noted for their enthusiasm to offer loans on properties in negative equity.
Employment circumstances change all the time, too. That well-paid job you once had is now but a fading memory. Or that once seemingly endless overtime is a thing of the past, resulting in a much-reduced pay packet. We have all seen well-paid jobs in manufacturing disappear and the story is the same in every region of the UK.
If you fall into any of these categories, please contact us now!