Are you a landlord or homeowner with a property that has limited or no equity?
Along with more than 2 million households you are probably feeling uncertain and imprisoned by your mortgage.
What was once a dream of owning your own home or having a portfolio of properties with zero debt, seems a distant past.
What is negative equity and how do I know if I am in this predicament?
Negative equity is simply when the value of your house is worth less than the actual amount you owe on your mortgage. So if the sale of your house is £200,000, but your mortgage is worth £250,000, you are currently in negative equity by £50,000.
You can find out if you’re in negative by calling your lender and asking for the outstanding balance. Once you have this information, you can determine the value of your house by visiting Zoopla or Rightmove. They both have tools that provide an estimate.
Being in negative equity is only a problem if you need to sell your house now…and this article will help you with this.
How to Deal with Negative Equity?
There are options available for you to deal with negative equity and hopefully end your nightmare.
1.Do nothing and wait it out.
If you don’t have or want to sell due to circumstances then put the fire on, sit down with a hot chocolate and ride out the storm. Over time, house prices increase so be it 1, 5 or 20 years your house price should recover to exceed your mortgage value.
Just make sure that you can keep up with the monthly payments….and also have sufficient income to cover any interest rate rises that will bump up your monthly payments
2. Reduce Your Debt Through Savings
If you are in the fortunate position of having some savings tucked away, then use it.
However, just be mindful that your lender may not allow you to overpay and you could be subject to additional fees for doing so.
3. Increase the value of your home
If your bank puts the breaks on you overpaying on your mortgage through additional savings, then you may wish to use the option of using the savings to increase the market price of your home.
Look at neighbouring properties and determine if you can do anything that makes you home stick out and appear more valuable. This may include an extension, adding a conservatory or undertaking a loft conversion.
Just make sure whatever you spend your hand earned savings on will contribute to increasing the value of the property by more than the amount you have spent.
4. Sell and Repay the shortfall over time
You could bite the bullet and just sell your home. This should be considered only if you’re facing extreme financial circumstances where you cannot keep up with payments or when the term on your mortgage is imminent.
Your lender may agree to forgive the deficit if the proceeds of the sale would be greater than if they repossessed the property and sold it at auction.
5. Allow your home to be repossessed
As above, this should only be used in the worse case scenarios. As your credit rating will be affected and your mortgage company can still pursue you for up to 6 years after your repossession.
6. Declare bankruptcy
Again this option is only recommended if you have tried every other option and there is no where to turn. If you do pursue this channel please seek professional legal advice.
7. Rent It Out
If you cannot sit it out and you have to move quickly, then why not think about renting your property out. If you are a landlord but want to move on as you are fed up with the headaches that tenants can bring, then this may not be an option that you want to entertain.
Do you want want to sell your negative equity property NOW?
As well as the above options you can consider selling your mortgage to specialists buyers.
Here at Sell With Richard, we have helped numerous landlords and homeowners move on from their negative equity dilemma.
In fact, Richard has also been through negative equity. So he knows exactly what you are going through and even more so has a solution he can personally vouch for.
So if you feel Richard can help you, then fill in the short form below
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