Negative Equity but need to sell property

To the many families and individuals that live in the U.K. that find themselves in the Negative equity trap.

What is Negative equity?

Negative Equity is when a property's value is lower than the total amount of all secured mortgage and loans placed upon it. For example your property has a saleable or market value of 100k, but the amount that you owe on your mortgage is more say 120k, this means you have Negative equity of 20k on your property.

Quite simply put... you now owe more than your property is worth! Sell property fast? Sell house quick? This may not be possible, don’t worry we have a solution for you...read on.

How could this situation arise, how does it happen?

Well it is surprisingly easy actually, here is a scenario... you buy your house or flat when house prices are at a peak, everybody knows that house prices can go down or up due to demand, interest rates, and economic factors... right?

You have now purchased your house or flat and decide that an additional loan would be useful to either consolidate what you owe, one monthly payment instead of many for example or you decide to buy a new car, pay off existing credit card debt, perhaps fix up your home or maybe pay off a personal loan. Warning! Be very careful when considering loans secured on your home! An easy way to Negative equity is falling into the trap of an additional loan because the additional loan plus your mortgage can put you into negative equity should property values fall in your area. Zero equity can arise just as easily.

At Buy sell property fast we would advise all our clients to consider some of the following factors that could eventually lead to Negative equity or Zero equity on their properties.

Property location, high unemployment levels in the region, job losses at major local employers, companies closing down or moving abroad, this could cause property values to fall quickly.

Also consider - In June 2010, the OBR ( Office for budget responsibility ) forecast that the government's spending cuts, designed to reduce its budget deficit, would lead to 610,000 public sector job losses between 2010/11 and 2015/16. Makes for a scary read does it not? If your property is in area where there are many government jobs the effect of this policy could result in Negative equity or Zero equity. Please also bear in mind that a rise in monthly mortgage payments due to higher interest rates increases your monthly outgoings and could make the property uneconomical or unaffordable to own outright in turn this could make it difficult to pay a secured loan back, the net effect could lead to Negative equity or Zero equity.

Many UK towns have suffered from an oversupply of similar properties on market when construction was booming a few years ago.  This may make it difficult for you sell your property at the same market price as when demand was higher, this then could lead onto Negative equity or Zero equity.

Something else that could affect your decision to sell is the inability for new buyers to obtain mortgages due to stricter lending criteria, higher deposits and expensive setup costs, therefore making your property difficult to sell and forcing price downwards. Negative equity or zero Equity.

So you regardless of all this you decide to sell... Here are a few things to look out for.

Additional costs. Does your mortgage company have any additional charges or costs for paying off your mortgage early? If you have taken out a fixed rate mortgage there maybe some penalty payments to be made these can be quite high. Don’t forget that if you bought your property as part of a shared ownership scheme with a builder, local council or government backed scheme you will need to apportion a percentage of the sales proceeds to them accordingly. You can see the negative equity scenario building up quite easily... Watch out! Some secondary secured loan companies will want to be paid the full amount of interest that they would have earned had the loan had run for its full term, in other words no discounts for early repayments or possibly even worse a penalty for paying off early.

In addition to the Negative equity and any “additional costs” if you choose to sell your property through an Estate agent you will have commission to pay usually between 1% and 2% sometimes more  plus VAT which is currently 20%.

Don’t forget to add your legal costs too, as you will need to instruct a Solicitor, depending on the type of property and value allow £500-£1500 possibly more if you have a valuable property.

Selling your property costs you money.

What else is available and what can you do if you find you are in Negative Equity or Zero equity? How about this?

www.BuySellPropertyFast.co.uk charges no commission, you will not pay any fee for our services! We can assist you with your legal costs or possibly even pay them in full for you. We will also cover the costs of all reports and surveys, even the phone call to us is Free too. It’s very simple call us now on FREEPHONE 0800 043 6316 

www.BuySellPropertyFast.co.uk might just have a perfect solution for you. If you find you have Negative equity or Zero equity we have two very exciting new ways forward for you to consider. We have our Negative Equity plan and our Zero Equity plan. Free to call No commission and nice people to speak with. Buy Sell Property fast FREEPHONE 0800 043 6316