Negative Equity
A home is in negative equity when its market value is lower than the amount still owed on the mortgage.
1 min read Buying a Home
What it means
A home is in negative equity when its market value is lower than the amount still owed on the mortgage. This can happen if house prices fall or only a small amount of the mortgage has been repaid.
Example
You bought a home for £250,000 with a £240,000 mortgage. If the home's value falls to £220,000 while you still owe £230,000, you're in negative equity.
Why it matters
Negative equity can make it harder to move home or remortgage.
Negative equity only matters if you sell, remortgage or your lender requires repayment.
Can I sell my home if I'm in negative equity?
Yes, but you'll usually need to repay any shortfall.