Mortgage Knowledge Base
Negative equity refers to a situation in which the value of a property is less than the amount of the outstanding mortgage or loan secured against it. Negative equity can occur when the value of a property decreases, such as due to market conditions or to a decline in the value of similar properties in the area.
Negative equity can be a problem for homeowners, as it can make it difficult or impossible to sell the property or to refinance the mortgage.
Taking out high loan to value mortgages (above 90% LTV) increases the chances of negative equity if property prices fall.
