Remortgaging With Negative Equity
According to a recent Halifax report, the average price of houses plummeted by 2.3 percent this February. The report warns that millions of homeowners will find themselves owning properties worth less than the amount they owe to their mortgage lenders if this trend continues. Homeowners need not really lose their sleep over this; they only have to wait patiently till the price of house rise once again. However, if you are a homeowner looking for a remortgage or trying to sell your house, negative equity is definitely something to worry about.
You can rest assured that you are not at risk of losing your property just because you have negative equity on it. All you need to do is make your repayments on time and continue enjoying your property. In fact, a number of homeowners found themselves with negative equity back in the early nineties, but survived the situation quite gracefully.
You need to worry about negative equity only if you want to get a remortgage or sell your property. If you want to get remortgage and fear that you have negative equity on your property, ask your lender to provide your mortgage balance and compare it with your current property value to find out if there really is any negative equity. Alternatively, you could request a real estate agent to value your property. If you find that you are in negative equity, your only option is to make your repayments in time because you will not be able to get remortgage on a property with negative equity.
Remortgage deals permitting you to borrow as much as 90 percent of the value of your property are now a thing of the past. Have a chat with your mortgage lender and find out if you have to stick to existing standard variable rates or if they can give you a better deal. If you are finding it difficult to pay off your mortgage, do not hesitate to approach your mortgage lender and find out if something affordable can be arranged. At the most, your mortgage lender might agree to extend your mortgage term, which might ease your current burden although you will have to pay more interest in the long run. You might also request your mortgage lender if they could permit you to pay just the interest on your loan till your financial situation improves.
Controlling the market value of property is something that you cannot do, but you can definitely take some steps to protect yourself from negative equity. Make it a point to pay off your mortgage as fast as possible. Consider maintaining the value of your property by making simple renovations such as repainting, installing better security systems, and so on. You can even rent part of your property so that you can pay off your mortgage loan faster. If you feel that you might end up with negative equity and be unable to get a remortgage, start saving up the extra amount you will have to pay to avoid financial burden in future.