What is negative equity?

“I’m in Negative Equity,” is something that many of us are hearing and talking about these days.

This is because more and more people have been caught in the ‘negative equity trap’ since house prices feel so rapidly since the highs of 2006/2007.

And it seems many of us are still struggling to cope with the stresses and strains that negative equity brings.

According to a report on www.belastlive.co.uk in May – two thirds of those surveyed in Northern Ireland (69%) say they are really worried about negative equity.

The YouGov survey conducted on behalf of Home Owners Alliance, BLP Insurance and Resi.co.uk discovered that almost seven in ten people in NI are worried about negative equity, compared to half the population across the rest of the UK.

Homeowners Alliance Chief Executive Paula Higgins said of the survey results: “It’s understandable why those living in Northern Ireland are the most concerned about negative equity.

“The market hasn’t yet recovered from the financial crisis of 2008, when millions around the country suffered negative equity. 

“At the time the average house price plunged by 15 per cent – and average asking prices in Northern Ireland are still 30 per cent lower than they were 11 years ago.”

But what is negative equity and how large is the problem?

A property is in negative equity if it’s worth less than the mortgage secured on it.

An example of this if you had bought a property for £180,000, with a mortgage for £165,000 and the property is now worth £100,000, you would be in negative equity by £65,000.

It’s estimated that there are around half a million properties in negative equity across the UK, although some areas are affected far more than others.

In Northern Ireland up to two out of every five properties bought after 2005 are in negative equity.

Worrying times but as a company we have a proven track record in helping Homeowners and Landlords move on from negative equity; our average negative equity write-off is 77% for our clients in 2018 ( where they have sold their property ).

And since 2013 our success rate is 96.6%.

And we also have received a 4.8 rating out of five from independent review site www.reviews.co.uk.

We are currently the only specialist negative equity and property debt company operating in the UK that offers the full range of services that clients need.

When it comes to finding the best solutions to property debt issues, nobody goes further or has more experience than our Negative Equity UK team. We’ve built our team and our business around you, our customers.

As the recognised industry experts in providing innovative property debt solutions, we are authorised and regulated by the Financial Conduct Authority (FCA number 688199). Our expert team consists of banking professionals, Insolvency practitioners, mortgage and finance specialists and chartered accountants

Our staff are trained to be non-judgemental and to act in a manner that is both compassionate and respectful. 

We go the extra mile because we want to make a difference. We want to help you move forward in a positive manner.

We are the recognised industry experts in providing innovative negative equity solutions. Our average property debt write-off in 2017 exceeded £75,000 per customer.

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And Tom Cardwell (Director at CD Fairfield) believes people should stop blaming themselves for being caught-up in negative equity.

“If it is an issue, you have to deal with it sooner rather than later. Hopefully, the stigma attached to the issue has reduced over time.

“We are very active in putting out good content in terms of what is happening in the industry and where the mortgage market is at.

“What I really mean by that is would have been very difficult to purchase a property 10 or 12 years ago and not be in negative equity today.

“So it wasn’t that people in negative equity have made some horrendous financial choice, or some reckless financial decision.

“They simply bought a property at the wrong time. It was just a matter of timing. First-time buyers in the last six or seven years don’t have this problem. They don’t have to worry about it.

“It is those who have re-mortgaged or purchased a buy to let property. Or purchased their first home during those boom years.

“It was all-encompassing. And it certainly is not something that was restricted to those with low incomes. We have clients where the household income was well in excess of one hundred thousand pounds.

“But they still have a debt issue and it is something that they will have to address. The first thing to do is recognise there is a problem.

“The second thing to do is seek some assistance and the third thing you have to remember is that the client was a victim of an economic crash and it is not something they have done.

“If someone is worried about negative equity? No matter what the level of their negative equity they should get in touch with us.

“We can put their mind at ease. We can explain to them exactly what their position is and we don’t engage in flannel or false hopes. In an empathetic fashion, we tell people where they stand.”

And Cardwell added: “Negative Equity is only a problem if you have to deal with it or do something about it.

“If you are in a position where you can repay 100% of your mortgage in the remaining term and you have no desire to move, then you don’t have to redress your negative equity problem in the short term.

“They might want to re-negotiate the terms of their mortgage and that is something we can do and help clients with.

“But predominantly the clients that are approaching us are ones that can afford to service the mortgage debt – normally an interest-free mortgage – on a month to month basis.

“But the level of negative equity in terms of repaying 100% of that debt is insurmountable in the remaining term of their mortgage

“Also there could be other factors that would be part of the equation. Usually, clients would come to us and they are first time buyers in the boom years between 2004 and 2008.

“They purchased a one or two bedroom house, or maybe even a smaller three bedroom property and they had no children at the time. The house suited them and was perfectly affordable.

“Now they have had a few children and now the house is impracticable for them to stay in that property.

“It is just not big enough and an example I use is that if the Housing Executive had been housing them – they would have been rehoused.

“But because it is their own property they are supposed to grin and bear it. But I don’t think that is reasonable?

“The good thing in our terms of our relationship with lenders and they will recognise that, even though a lenders first position is not to help a client in that position.

“But that is not their final decision and there is a responsibility from lenders to treat customers fairly. And putting that across in a compelling way can bring lenders to the table,” he added.

Speak to Bob today on 0161 660 4403 to see how we can help you.