A negative equity means that the present value of your property is less than the balance of the mortgage you are paying off. This is because house values are not constant. Real estate prices are influenced by many different factors that change over time. So remember that even if the value of your property is not satisfactory now, it may change in the future.
If you want to know if you have negative equity, check the market value of your house and compare it to your outstanding mortgage equity. It's worth counting when you want to sell your house, but you keep paying off your mortgage.
HOW TO AVOID THE NEGATIVE EQUITY?
There are several ways to avoid negative equity. One of them is to make the highest possible deposit when buying a property. Another way is to regularly overpay your mortgage (if the terms of your contract allow it).
WHAT CAN YOU DO WHEN YOU HAVE FALLEN INTO NEGATIVE EQUITY?
So… It all depends on your current situation. There are few things you can do.
If you can pay off your mortgage as agreed in contract, then do so. If you don’t need to move, this will be the best solution. You can also increase the current value of the property. Use the available means, add some improvements or ask your real estate agent for advice.
Remember that selling a house with negative equity is unprofitable. In such a situation, it is better to wait. If you don’t have to do it, then don’t do it. However, if you need to sell your house with negative equity, remember that you will need the approval of your mortgage lender.
