Should I Be Concerned About Negative Equity?
Negative equity frequently features in the local news, and it's no surprise that it does. According to the most recent figures from the Office of National Statistics, approximately 68,000 homes in Northern Ireland are in negative equity. With such a significant portion of properties in negative equity, many people are worried about their homes.
Should you be concerned if your house is in negative equity?
The answer depends on what your personal circumstances are. If you want to stay in your home and your monthly mortgage repayments are affordable, then negative equity is probably not a problem for you.
Negative equity becomes an issue if you want to sell your home, so it can be a concern for people whose circumstances have changed. You may need to relocate for work reasons; you may have lost your job, making mortgage repayments unaffordable; you may be separating from your partner; or perhaps your family has grown and you need a bigger home. Since negative equity means that you owe more on your mortgage than your house is worth, if you sell the house, you will owe the bank extra money. This is called a shortfall debt.
Can I sell my house in negative equity?
Many people are under the impression that they cannot sell their house if it is in negative equity. They feel trapped in a mortgage that is no longer suitable for them. While it can be more difficult to sell a house in negative equity, it is not impossible. Many of our clients have been able to sell their homes. It just requires planning and negotiation.
What should I do if I need to sell my home?
If you want to sell a home in negative equity, the first step is to seek further advice until you fully understand negative equity and your options. Next, you will need to make a plan to tackle the shortfall debt and agree this plan with the bank. A financial advisor can help you make a plan that works for you. Many debt advice services will offer you a free consultation, so don't be afraid to get a second opinion and choose the advisor you feel most confident in.
Negative equity can be a difficult challenge, but with the right plan, it can be overcome.