Interest-Only Mortgages, Divorced Couples, Mortgage Arrears Solutions

Case Studies: What Led them to Negative Equity

  • Case Studies: What Led them to Negative Equity
    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 differences, too.

    In our experience, no two stories are identical. Why? Because no two people are identical. In trying to highlight the overall problem of negative equity we are limited to making generalisations, looking at the things people have in common and indicating similarities in their circumstances. When we sit down with a client to examine his/ her case, that is when we get to know that man, woman or couple, and their particular situation. The details and the true extent of their wants and needs are what defines each case.

    Case Study Examples: 

    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 the market-driven property valuations soared. Money appeared to be sufficient, 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 these circumstances, mortgage advice certainly did not appear to be all that important. Small print? Details? Particulars? If anything went wrong, we would get another loan elsewhere. After all, weren't the banks queuing up to help us?

    At the time interest-only loans sounded like a great idea because they were cheaper. So we put a little plan in place to clear the capital we had borrowed. What could go wrong?

    Then the crash hit. The property boom ended, and property costs became a little more realistic as house price increases stopped and then went into high-speed reverse. Negative equity had arrived.

    Ten years later and there are still thousands of cases of negative equity in the UK. However, many of those hundreds of thousands now need to move because their circumstances had changed since they bought that property.

    Then it was valued at £225,000; today its worth £140,000. That's £85,000 of negative equity. If it was an interest-only mortgage, the capital must be repaid, too.

    Case Study 1:
    Since buying your three-bedroom home, it is no longer big enough for you and your growing family. You need more space, and you need to sell. Nevertheless, because you are in negative equity, you cant. 

    Case Study 2:
    Possibly 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 needs to be sold, or you have to buy out your former partners share. That will require a new mortgage deal and banks are not noted for their enthusiasm to offer loans on properties in negative equity.

    Case Study 3:
    Employment circumstances change all the time. A new job offer in a different city, the unfortunate position of being made redundant, budget cuts within your company, with today's up and down economy anything could happen.

    Numerous situations happen in life that could see you in a hard time, and we understand that. We are here to help you get back to the life you want! If you're in negative equity and want to make the first steps to negative equity freedom contact us, we are here to help! 



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