Wednesday, November 12, 2008

Negative equity – scary figures

Negative equity – dealing with the wolf at the door

I realise that negative equity is going to be a big problem for many. Are these estimates not a bit over the top?

Posted by kaz @ 10:19 AM (746 views)
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3 thoughts on “Negative equity – scary figures

  • I have looked at lots of different estimates and worked backwards from BoE figures on LTV, broadly speaking, each 1% fall from peak causes about 100,000 mortgages going into Nequity (plus minus 20,000). So if prices fall 40% from peak, that’s about 4 million in Nequity.

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  • I doubt it. Anyone who has bought or remortgaged after 2003 with a normal (high) LTV and hasn’t been paying off the loan is going to end up in negative equity.

    Having said that, it isn’t negative equity that leads to reposession, it is not paying your mortgage that leads to reposession, and it is possibly more likely that you will be reposessed if you aren’t in negative equity. Last time round, a lot of banks waited until properties were back in positive equity before reposessing them.

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  • At the first signs of negative equity – and for those who are unsure, this is the point where the market value of your property becomes less than the mortgage secured upon it (and any other loans that may use the property as collateral) – the thing to do is take stock. Investigate ways of cutting the debt – many mortgage lenders will have an option available to pay off a chunk of the mortgage, generally up to ten percent – by using available funds.

    What kind of advice is this ? If you are in negative equity and can afford the mortgage carry on paying your mortgage as per normal. Negative equity and reposession are two different things.

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