Negative Equity Options

Negative equity options
What can I do when my properties are in Negative Equity?

Negative equity is essentially when a property is worth less than the current mortgage you have on it. You bought a house for £200,000, and you took out an interest only mortgage for £175,000. Now, the latest market value for your house is £135,000. As a result, you have £40,000 of negative equity as your mortgage is worth more than the value of your home.

It is believed there are roughly 350,000 properties in England and Wales that are still in negative equity. Mostly, these properties reside in the Midlands, North of England and Wales. They come as a mixture of investment buy-to-lets and regular homes. You can trace back the cause of this negative equity crisis to the housing crash in 2008; over a decade later and we’re still feeling the effects!

But what’s the problem with having negative equity – and what can you do to resolve it?

Why is negative equity an issue?

If you want to sell your home and the mortgage you owe is less than the value of the property, then you’re essentially in debt. Going back to the example above, let’s say you sell your property for £135,000, but you have the £175,000 mortgage. Now, you still have an extra £40,000 to pay back to your lender.

The good news is that there are solutions to deal with this problem. Ideally, you want to be able to deal with your negative equity and move on – here’s how…

Mortgage write-downs

Write-downs are relatively common in both the business and financial worlds. In essence, a mortgage write-down is where you evidence to your lender that your current situation is no longer tenable due to a change in your affordability or situation, and propose a solution that better suits all parties.

Clearly, this can be hugely beneficial to both you and your lender as it can remove the impending problems that would ultimately lead to repossession or receivership. This approach makes sense and can often be a viable alternative; it allows the distressed borrower to move on in a responsible fashion without extreme levels of stress and allows the lender to maximise their returns in terms of achieved value for the asset, saving on both professional fees and time. Not all lenders are open to this type of settlement, but many are becoming progressive in their attitude to this type of settlement.

CD Fairfield, through our brands Negative Equity UK, Negative Equity NI and Landlord Debt Advisory, has good working relationships with the majority of the UK high street lenders. We’ve managed to secure average an write off of 76% of the residual mortgage debt for over 600 clients over the last five years. We know how to evidence lenders that it’s worth more to them to write down your mortgage and move on, rather than go ahead with the alternative.

Missing payments and future interest rises can mean the debt becomes even harder to repay, which, if you are currently struggling, means that the lender may need to eventually repossess your home – which, as we have said, isn’t ideal for them. Adding in the fact that repossessed homes tend to sell for much less than average means that the lender could end up with a larger shortfall debt, meaning a mortgage write-down should also be the best option for them.

Need to sell a property fast? We can help.

Selling a house can be a long process. In Northern Ireland, the average time it takes to sell a property is 119 days, about three months, and for some sellers this is just too long.

Some people may need to move house because they have a sale agreed on another property or you need to move city, or even country for a new job or to enjoy retirement somewhere warm, and can’t afford to wait three months to sell an existing home.

People going through a divorce may also want to sell their home as quickly as they can in order to end any financial commitments they might have with their former partner, so they can move on with their lives as quickly as possible.

A fast house sale might also be necessary for borrowers dealing with property debt who need to sell as part of a settlement with their lender.

But moving can be a difficult enough process, especially when dealing with other changes in personal circumstances like a move or a divorce, and having to handle a protracted sale at the same time is only going to make things more difficult.

At Fast House Sale NI, however, we can help you get a property sold as quickly as possible, so our clients can move on with their life without the burden of an old property holding them back.
We can agree an offer on the property in as little as 48 hours and once we’ve agreed a price, we can complete the sale as quickly or as slowly as needed depending on the circumstances. Once we’ve made an offer it will remain valid for 28 days, to give enough time to decide if it’s the best option.

Selling a property with us could also save money. We typically buy properties for 80-85% of their market value, which might sound like a loss compared to selling with an estate agent, but there can be significant savings along the way.

Selling property through an estate agent means have to having a valuation, there will be solicitor’s fees, and, of course, the mortgage repayments will still have to be covered until the sale is completed, which could take months.

Selling your home with Fast House Sale NI, however, is different. We offer a free valuation, consultation and will contribute to the solicitor’s costs, so selling a house to us is much cheaper than a conventional sale and completing the sale faster means getting out of the making mortgage repayments a lot faster.

We also offer much more discretion, than an estate agent will provide. Privacy is important, especially during a difficult time, such as when going through a divorce. When dealing with us, there’s no need for a billboard outside the house. We won’t post pictures of the house online or in a shop window for everyone to look at. When selling a house with Fast House Sale NI, we guarantee confidentiality.

For more information, call Fast House Sale NI now on 0844 846 8880 and we will make an offer within 48 hours.