It can also be difficult if you want to remortgage; if you want to save money by getting a fixed rate or a cheaper deal. Most lenders won’t let people with negative equity switch to a new mortgage deal when their existing one ends. Instead, they’ll normally be moved onto the lender’s standard variable rate (SVR).
What happens if you remortgage in negative equity?
As we said, being in negative equity doesn’t mean you’ll lose your home, as long as you keep paying your mortgage. And you don’t have to apply to remortgage to switch to your lender’s SVR – it happens automatically at the end of your deal.
Can you transfer negative equity to a new mortgage?
Negative equity mortgages allow you to transfer the negative equity to a new home – in other words, your debt moves with you. Only a few specialist lenders offer negative equity mortgages and the interest rates are usually high. You might also face early repayment charges on your existing mortgage.
Can I remortgage when I’m in negative equity? A lender will be unlikely to approve a remortgage deal because they would need to lend you more than your home is worth. It’s a tricky situation, especially when your current mortgage deal expires, because you will typically be moved to the lender’s standard variable rate.
What happens if your house is worth less when you remortgage?
When you apply for a new mortgage a new lender will want to value your property. So if your house is worth less than the amount you need to borrow to repay your current mortgage – which is what you need to do when remortgaging – a new lender may not be prepared to offer you a loan.
What does negative equity mean on a mortgage?
The mortgage specialists we work with have expert experience in negative equity mortgage solutions and access to mortgage lenders across the UK. What is negative equity on a mortgage? Negative equity is when the property you have a mortgage on is worth less than the amount remaining on the mortgage. This is usually caused when property prices fall.
How can I get Out of negative equity on my house?
To get out of negative equity, you need to get the amount you owe on your mortgage down, and the value of your home up. There are a few ways to go about this.
Can You remortgage if you have no equity in the property?
This is known as remortgaging, and part of the application process involves the lender considering how much equity you have in the property to work out what rate you’ll be charged. If you’re in negative equity, you have no equity in the property.
How many houses in the UK have negative equity?
Estimates at the time of writing say that in the UK alone, there could be as many as half a million homes in negative equity. You are more at risk of negative equity if you have an interest-only mortgage since your monthly payments might only be covering the interest on the mortgage and you’re contributing nothing to reducing the debt you owe.
