"I found your staff to be professional and friendly, and wouldn't hesitate to recommend to friends and family."
Mr & Mrs T., Somercotes, Derbyshire
Negative Equity is where the outstanding mortgage on a property is greater than its market value, or to put it another way, where your property is worth less than what you owe on mortgage!
On this page we take a detailed look at Negative Equity, and the problems it can cause, particularly when it comes to getting a mortgage, and look at how we can often help!
Table of Contents:
So, as we mentioned above, a Negative Equity situation occurs when the outstanding mortgage on a property is greater than its market value, or in even simpler terms, where your property is worth less than what you owe on mortgage!
Negative Equity often occurs at the end of a property boom where house prices have overheated, usually because the demand for houses has outstripped available supply of property in the market place, and has pushed house prices up to an artificially high level. This situation is followed by a price crash.
If a buyer purchased his home at the time when the housing market was strong and prices were over-inflated, then the subsequent fall in house prices inevitably leads to a situation where the value of the property drops to less than the readjusted property value.
One of the most severe property recessions happened in the UK housing market in late 1988 and continued to deteriorate over the following three years or so. The economic recession also had the twin evils of very high mortgage interest rates coupled with high unemployment, and so the economy slumped, as did the demand for properties.
So for example, a property purchased in 1988 for £150,000 with a 95% mortgage of £142,500 typically plummeted in value by up to 30% over the following two or three years. In our example, a diminution in value of say 25%, would have resulted in the property's value falling to £112,500, which when set off against the mortgage outstanding, would have meant a negative equity situation of £30,000 (£142,500 - £112,500).
It is quite obvious that negative equity can bring with it certain difficulties for the homeowner, including:
The answer would usually be yes, but subject of course to assessment.
Shire Direct has an extensive portfolio of mortgage product providers and plans to accommodate most situations. One particular scheme will consider lending up to 125% of the new property value, subject to a maximum of £30,000. The additional borrowings are unsecured, although the interest rate on this portion of the transaction remains the same as the secured element. So effectively any negative equity of up to £30,000 that has to be repaid, can be accommodated in the new borrowings.
Yes, no problem!
Here at Shire Direct we understand that not everything in life is black and white, and occasionally a wheel may drop off the wagon! If you've previously had difficulties with a property repossession, for whatever reason, the main thing is that your personal circumstances and finances are now such that you are in a position to return to the property ladder.
So, whatever your circumstances, and whatever your requirements, we'll always do our best to come up with the most appropriate solution geared specifically for you. We have the skills, products, and know-how to provide you with help - even in the trickiest of situations!
Naturally, we'll carefully examine your circumstances, needs and aspirations and provide you with a rapid in-principal decision. Remember our qualified mortgage advisors are available to discuss the options open to you.
You'll find our service and approach to be friendly yet professional, helpful and not in the slightest bit stuffy! So please don't hesitate to Contact Us if you would like to discuss your requirements, naturally without obligation!
Our mortgage advisors are available up to 10.00pm everyday (including weekends!) on Freephone 08000 282 281 and will be delighted to chat through your options. Alternatively why not enquire online at any time. In either instance we'd love to hear from you!
Hopefully, we've managed to explain Negative Equity and the impact it can have on getting a mortgage, and how we can assist. Remember there is a wealth of mortgage related information throughout the pages of this site, so why not take a few moments out to explore some of the possibilities, and don't forget we're only ever a free phone call or couple of mouse clicks away, and will be delighted to assist you in any way we can!
The overall cost for comparison is 9.8% APR.
The actual rate available will depend upon your circumstances. Ask for a personalised illustration. APR variable and based on a usual case. Most customers are likely to receive a lower rate or the same rate as our overall cost for comparison rate - learn more about APR.
There are no upfront broker fees.
However, a fee may be charged on successful completion. An indication is that on conforming cases (straightforward applications with no or minimal adverse credit) a fee may be charged of up to 1% of the amount advanced, typically £795 and will depend on your circumstances.
For non-conforming cases (where case research and processing may be more complex due to adverse credit or unusual circumstances), a fee may be charged of up to 3% of the amount advanced, typically £1,995.
THINK CAREFULLY BEFORE
SECURING OTHER DEBTS AGAINST YOUR HOME.
YOUR HOME MAY BE REPOSSESSED
IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
Adding existing debt to your mortgage will increase the repayment term and overall cost.
Are you worried and becoming stressed because you are having problems getting a mortgage or remortgage? Worry and stress no more! Here at Shire Direct we provide tailor made mortgage solutions to suit you, and can usually help with all kinds of circumstances including...
Remember, we're here to help, and would love to hear from you!
Over £2,000 worth of Argos Vouchers to be won in the Shire Direct Grand Prize Draw 2008! Terms and conditions apply - please read article for full details.
Shire Direct and Shire Direct Mortgages are trading styles of Shire Processing Centre Limited which is
Authorised and regulated by the Financial Services Authority in respect of regulated mortgage products and general insurances.
Registered No: 302389. Commercial funding and Secured Loans are not regulated by the FSA.
Licensed Credit Brokers. Consumer Credit Licence Number: 349999.
Shire Processing Centre Limited is registered under the provisions of the Data Protection Act by the Information Commissioners Office: Registration No: Z6795249. Registered in England & Wales. Company number: 2732202. Telephone calls may be recorded for training, monitoring and security purposes. All applicants must be aged 18-years or over.
