Negative Equity Mortgages / Remortgages
Hopes that the housing market is showing signs of life canít come too some for those who are facing the misery of negative equity.
And according to the Bank of England more than 1.1 million homeowners are in that situation where their mortgage is worth more than the price of their house. They bought at the top of the market and have now seen the value of their house plummet.
Itís a potentially desperate situation as itís supposed to be impossible to move house if your mortgage is bigger than the value of your house ñ or at least it was.
However there are signs of radical action from lenders ñ many are now giving customers money OFF their mortgage in a bid to get them to go away.
Specialist lenders such as GMAC, Advantage and Edeus are all offering deals to customers, while Mortgage Express, part of the defunct Bradford & Bingley, is offering to waive redemption penalties if customers move their mortgage elsewhere.
In some cases theyíve written off 20% of a home loan so customers can leave on the grounds that it gets potentially problem customers off their books.
Itís a winner for them as it makes their books look better ñ and itís definitely a winner for the borrower who gets part of their debt written off.
There are however other ways of beating negative equity hell even if your lender isnít quite as generous. MoneyExpert.com shows you how to turn negative equity positiveÖ.
Negative Equity Is Not A Problem
Negative equity isnít an issue if you donít want or need to move home and can afford your repayments.
In fact with mortgage rates low it can be a good time to start overpaying your mortgage so you can cut the debt you owe.
If youíre on an interest-only mortgage it can be a good time to switch to repayment so that you can start paying off some of your loan.
Move To A Better Mortgage
The bad news is that if you want to remortgage and are in negative equity then your chances are currently limited.
Government-owned lenders Halifax and NatWest are both willing to offer deals to existing customers who are in negative equity.
But outside of those lenders the choices are limited as the best deals on the mortgage market currently are around 95% loan-value and if youíre in negative equity you will not qualify.
If you have to move then you will have to accept that the outstanding loan that is not covered by your house value will have to be paid off at the original rate and youíll have to come to an agreement with your lender.
Renting To Beat Negative Equity
You can rent out a room to raise extra cash ñ any money you make renting out a room is tax-free up to ?,250 a year.
If you rent out a room make sure to tell your home contents and buildings insurer as if you donít and then have to make a claim you will be turned down.
You can rent your home out and move into rented accommodation to keep costs down. You will need to switch to a buy-let mortgage though and that can be difficult.
Government Mortgage Repayment Help
The Government has introduced help for those struggling with mortgage repayments and offer the Support for Mortgage Interest Scheme which pays the interest on your mortgage.
There is also the Homeowners Mortgage Support Scheme which aims to keep people in their homes even if they have missed several months of mortgage payments.
Lenders are also pledged to do more to help people in trouble and if you are finding it tough you should always let your lender know.
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