Need to Sell a Negative Equity Home?

Negative equity can be a real problem for people who want to sell their house. You might not even realise your home is in negative equity, but finding out is an important first step to take. In this article, we look at what negative equity means and how it could affect you. We also look at different options for those selling a house with negative equity.

What Does Negative Equity mean?

When you buy a property and take out a mortgage for it, you hope that one day you will be able to sell the property for the same (or more, hopefully) than what you originally paid. However, the value of property rises and falls. If your property isn’t worth as much anymore but you took out a mortgage to buy it in the first place, the house could now be in negative equity.

Let’s use an example to explain. If you still owe £150,000 for your mortgage but your house is only worth £140,000, you are £10,000 in negative equity.

Selling a house with negative equity is challenging. If you want to sell the house in the example above, you wouldn’t be able to do so until you were able to pay £10,000 to your mortgage lender. Not all homeowners are able to cover large payments like this.

Is My Property in Negative Equity?

To find out if your property is in negative equity, you need to know two things:

  1. The value of your house. You can find out what your house is worth yourself, but if you want to be sure about negative equity, it would be best to invite a few local agents to give you a value.
  2. How much you still owe on your mortgage.

To work out your equity, do the following calculation: subtract your outstanding loan amount from the value of your house.

What are My Options?

Selling a house with negative equity isn’t your only option, at least not right away. There are other paths you could take to ease yourself out of negative equity or raise the value of your property.

Keep your house

The longer you stay in your property and pay your mortgage, the more of the property you will own and your equity will increase. You might even find that the property market changes, increasing the value of your home. However, we understand that staying in your home might not be an option for you.

Overpay your mortgage

To reduce the size of your mortgage quickly and thereby reduce the negative equity tied to your property, you could start making overpayments. You should look at your finances closely and decide whether or not you can afford the increased payments. Remember, some lenders charge penalty fees for overpayments, so speak to your lender and take this into consideration.

Some people choose to use their savings to pay a lump sum and reduce the size of their mortgage. Again, you must consider the implications of doing so. Will your lender charge you an overpayment penalty? Is your money worth more in a savings account where it earns interest?

Boost your property’s value

If your property’s value has fallen, pushing you into negative equity, you could try to boost its market value and sell the house for more. If you don’t have the spare cash needed to make large-scale improvements, don’t worry – even the smallest of tweaks could make your house more desirable.

Find out how to add value to your home even if you don’t have the budget for it.

Transfer your mortgage to another property

If selling a house with negative equity is your only option, you could speak to your lender to find out if they will allow you to transfer your current mortgage to another property. Not all banks or mortgage lenders offer this option, but it could be the solution you’ve been searching for.

Remember, if your current property is in negative equity, transferring your mortgage will result in increased repayments or a longer repayment term. Alternatively, you could move to a lower value house.

Selling a House with Negative Equity

Selling a house with negative equity isn’t an ideal situation to be in, but not everyone has a choice. You might need to sell your house to clear debt, or you might be moving abroad. Perhaps your property has been damaged and the value has fallen, pushing you into negative equity. Maybe you can no longer afford your mortgage repayments and have no choice but to sell up.

If your home is in negative equity and you need to sell it fast, contact our team to discuss our fast and hassle-free service. We are fast house buyers and we buy property all over the UK in any condition. The sale usually only takes days or weeks to progress, and that’s because we use our own cash facility to fund the purchase and we handle all the administration and legal processes ourselves.

If you want to sell your house fast and move forwards instead of backwards, talk to our expert team who would be delighted to help you. Give us a call on 0333 880 4362 or fill out our online enquiry form to get the ball rolling.


Picture of Bobby Turner

Bobby Turner

Market research, writer & property specilaist for Zoom Property Buyer. Over 10 years in property sector. Previously at WhatHouse?