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When everyone has a home

Housing advice for Northern Ireland

Negative equity in Northern Ireland

If you're in negative equity it means you owe more on your mortgage or other secured borrowings than your home is currently worth. There is no easy solution to the problem of negative equity, but being in this position does not automatically mean that your home will be repossessed if you fall into arrears.

Repayment options for borrowers in negative equity

Your lender is likely to be a bit more cautious about options available for repayment of arrears.  You will usually need to get the lender's consent before you can sell the property if it's in negative equity. You may not be able to sell your home without making a loss, but you should still be given a reasonable chance to repay your arrears and take advantage of any available benefit or government scheme.

You should seek specialist advice if you are in negative equity, as some options may have a less favourable outcome for you than others. If you voluntarily surrender the property by handing in the keys to your lender you will still owe your lender money because your home is now worth less than your remaining mortgage.

Remortgaging can be difficult when there is no equity in your home. If you are in arrears and are facing negative equity, you should speak to a specialist debt adviser.

Selling the property

You can sell your home in the normal way if you have enough savings to pay off the negative equity and your selling costs . If you don't have enough savings to cover this, it may be better to wait until property prices rise and your home increases in value. 

You usually need to get your lender's permission before selling. You may also need permission from other creditors if you have secured loans. It may be easier to get this if you have realistic plans to pay off everything you owe. 

You will still be responsible for your monthly payments until the sale is completed. Selling may take a long time, so the amount you owe could increase considerably. You may also have to pay rent when you move somewhere else.

Only let your lender sell your home as a last resort, there is usually a better option. Selling it yourself on the open market may mean you are able to sell at a higher price.  Many lenders sell repossessed properties at auction where selling prices can be very low.

After the sale

You can still end up owing your lender money if you sell your home when you have negative equity. You must pay back everything you originally borrowed even if the money from the sale doesn't cover the cost of your mortgage. Your lender can still take legal action against you after your home has been sold. This will affect your credit rating and will make it more difficult to get a mortgage in the future. 

Hiring a negative equity company to help you sell

There are a number of companies which will offer to negotiate with your lender to allow you to sell the property and write off some of what you owe.  These companies charge a fee for their services.  In many cases it's possible to negotiate this kind of deal yourself without having to pay any middlemen.  If you'd like advice on how to do this for yourself, please call our specialist mortgage debt advice service on 0300 323 0310.