According to a report today by the BBC, the Council of Mortgage Lenders has said that 2 million UK homes are now in negative equity.
For most people negative equity means they cannot hope to sell their home until the market turns and that could be years away.
If you own a home worth £200,000 and you bought it with a 90% mortgage (or remortgaged to 90%) and the prices have dropped by even 10% then that means you will owe your mortgage lender more than the property is worth today. Your house will be worth £180,000 and your mortgage could be slightly more with arrangement fees added on at the time you took it.
Worse still you probably have a redemption penalty that means you cannot sell within 2 years without paying a penalty of up to 3% of the mortgage value.
That’s another £5,400, plus maybe a 1% arrangement fee of £1,800.
Now you need to sell your house you’ll need to sell with an Estate Agent. The agent will charge you around 1.5% for selling – another £2,700 plus a HIPs pack of around £400.
This all adds up to a selling cost of around £10,300. You would need to sell your house worth £180,000 for at least £191,000 just to walk away from your mortgage debt.
The worse news is that your next door neighbour who bought a couple of years before you and who doesn’t have an early redemption penalty and only an 80% mortgage can afford to sell for £170,000.
If you were the buyer it’s easy to see which house will sell and which house won’t.
However, there is an answer in many cases. I have developed a way of helping sellers who can’t sell because of negative equity. I have helped a number of people to walk away from their negative equity debts and get on with their lives, knowing that the problem is taken care of.
If you are based in the area that I work in then I can usually help. Even if you are not in my area in some cases I can help too.
Why not fill out the short form below and see if I can help. You really have nothing to lose except your negative equity!
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