Wednesday, June 13, 2007
“Negative equity”-word creeps up in mainstream press
"If house prices take just a marginal dip, borrowers with 100% loans can quickly end up in negative equity. Borrow more than 100% and you are in negative equity from day one, with a property automatically worth much less than your borrowings. This shouldn't matter as long as you are happy in your home and prices ultimately pick up. But having little or no equity from the start can make it harder to climb the housing ladder in the future. In a real economic crisis, it is worth remembering that homeowners in negative equity cannot simply return their keys to their lender and walk away. If the property is sold for less than the value of the mortgage, the borrower is still liable for the difference"