Negative Equity

Negative equity occurs when the amount of money that owed to a mortgage lender on a property is greater than the amount of money that could be made by selling it. This tends to occur when house prices are falling, or when 100 per cent or larger mortgages are taken out on a home.

Negative equity is not in itself a bad thing, as long as the mortgage holder keeps up debt repayments and does not want to move house. However, if the mortgage holder fails to keep up with debt repayments while in negative equity, not only could their home be repossessed, but even after that they would still be in debt.

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