Sell Your House With Negative Equity

When your home is worth less than you owe, what can you do?

Finding out that your home is worth less than the amount remaining on your mortgage can leave you feeling trapped.

You may want or need to move, but the figures don’t seem to work. Perhaps your circumstances have changed, you need to relocate, you’re struggling financially, or simply don’t want to remain tied to a property that is worth less than the mortgage secured against it.

What is negative equity?

Negative equity occurs when the amount outstanding on a mortgage is greater than the current value of the property.

For example, imagine your home is currently worth £200,000, but you have £220,000 remaining on your mortgage.

That would leave you with £20,000 of negative equity before taking account of any costs associated with selling.

The important point is that negative equity is based on the relationship between the property’s current value and the amount owed, rather than what you originally paid for the property.

It can become particularly difficult if you want to sell or move because the proceeds from the sale may not be enough to repay the mortgage in full. MoneyHelper explains that someone in this position may need to find another way to cover the shortfall and should speak to their lender if they need to sell.

How did I end up in negative equity?

There are several reasons why homeowners can find themselves in negative equity.

Perhaps you bought your property when prices were higher and its value has subsequently fallen. You may have taken out a high loan-to-value mortgage, borrowed additional money against the property, or simply not yet repaid enough of the original mortgage.

Negative equity can also become a problem when circumstances change unexpectedly.

You may now need to:

• Move for work
• Separate from your partner
• Downsize
• Deal with financial difficulties
• Sell an investment property
• Relocate
• Sell a property that has become unaffordable
• Move to a different area

Whatever the reason, the first step is to understand exactly where you stand financially.

How much negative equity do I have?

Before making any decision, you need two reasonably accurate figures:

1. What is your property currently worth?
2. How much do you owe your mortgage lender?

For example:

Current property value: £200,000
Mortgage outstanding: £220,000
Potential shortfall: £20,000

This is only an easy illustration. Your actual position could be very different.

You should check your current mortgage balance with your lender and obtain a realistic assessment of your property’s current market value. MoneyHelper also suggests checking the mortgage balance and property value carefully before deciding what to do.

Can I sell a house with negative equity?

This is one of the most important questions people ask.

It may be possible, but negative equity makes the situation more complicated.

If your property sells for less than the amount required to repay your mortgage, there will be a shortfall.

For example:

Mortgage outstanding: £220,000
Sale price: £200,000
Shortfall: £20,000

The mortgage does not simply disappear because the property has been sold.

You therefore need to understand how the shortfall would be dealt with before committing to a sale.

Depending on your circumstances, you may have savings available, be able to agree an arrangement with your lender, or have other options available. This is why we recommend speaking to your lender and taking appropriate independent financial or debt advice where necessary.

Don’t simply assume that selling the property is impossible – but don’t assume that selling automatically clears the mortgage either.

What are my options if I’m in negative equity?

There isn’t one solution that works for everyone.

Depending on your circumstances, you may be able to consider:

1. Stay in your property

If you can comfortably continue making your mortgage payments and don’t need to move, staying put may be the simplest option. Negative equity does not automatically mean you have to sell your home.

2. Speak to your mortgage lender

If you need to move or are worried about your ability to maintain your mortgage, talk to your mortgage lender as early as possible. Your lender may be able to explain options relating to your existing mortgage.

3. Consider whether the property can be sold

If selling is necessary, you need to establish the likely sale value and how any mortgage shortfall would be dealt with. This is where getting the right information before putting the property on the market can be extremely important.

4. Consider whether waiting could help

If you can remain in the property and maintain your payments, you may decide to wait and see whether the property value changes and/or your mortgage balance reduces. That won’t be suitable for everyone, particularly where circumstances have changed.

5. Get independent advice

If the negative equity is connected with financial difficulty, mortgage arrears or debt, independent debt or financial advice may be appropriate.

There is no single “negative equity solution”. The right decision depends on your circumstances.

Worried About Negative Equity? Let’s Talk

Worried About Negative Equity? Let’s Talk  (H2 blue)

If you’re worried that your home is worth less than your mortgage, you’re not alone.

Perhaps you’ve already spoken to your lender. Perhaps you’re considering moving but don’t know whether the figures will work. Or perhaps you simply want to understand your options before making any decisions.

We’re happy to have a confidential conversation about your situation.

There is no obligation to sell.

What if I need to move because my circumstances have changed?

Negative equity can become particularly stressful when moving isn’t simply a lifestyle choice.

Perhaps you’re separating from your partner, relocating for work, downsizing, dealing with debt or trying to move closer to family. In these circumstances, remaining in a property may no longer be practical.

The important thing is not to make assumptions about what is or isn’t possible.

Start by establishing your mortgage balance, obtaining a realistic property valuation and speaking with the relevant professionals about your circumstances.

If you are considering selling, we’re also happy to have an initial conversation and explain what we can and cannot do.

Negative Equity and Mortgage Arrears

Negative equity and mortgage arrears are two different things. You can be in negative equity while still making every mortgage payment on time.

However, if you are both in negative equity and struggling to maintain your mortgage payments, the situation can become more urgent.

If you’re experiencing mortgage difficulties, contact your lender as soon as possible. It is highly  recommended speaking to your lender early and seeking debt advice where appropriate.

Don’t wait for the situation to become a repossession problem before asking for help.

Negative Equity After Separation or Divorce

A relationship breakdown can make negative equity particularly complicated.

You may both want to move on, but discover that the property is worth less than the mortgage.

There may be questions about:

• Who remains in the property?
• Can the property be sold?
• How would a mortgage shortfall be dealt with?
• What happens if one person wants to sell but the other doesn’t?
• What happens to the mortgage?

These situations are personal and can have legal and financial consequences, so appropriate professional advice is important.

Can Quick Property Sale help with negative equity?

If you’re considering selling a property in negative equity, the first thing we need to understand is your individual situation. We don’t want to give you unrealistic promises.

If the property’s market value is less than the mortgage balance, there may be a shortfall to resolve. A sale therefore needs to be considered alongside the mortgage position and any agreement required with the lender. What we can offer is a straightforward conversation about your circumstances.

We’ll explain what we believe may be possible and, just as importantly, tell you if we don’t think we’re the right solution.

Helpful Negative Equity & Financial Guides

• Negative Equity House Options Explained
• Can You Sell a House With Arrears? Your Options
• Get Out of Debt by Selling Up
• Should You Sell House Due to Debt?
• How Do People Get Into Arrears?
• Can I Get a Mortgage If I Am in Debt?
• Reasons You Might Be Refused a Mortgage

Frequently Asked Questions

What does negative equity mean?

Negative equity means your property is worth less than the amount outstanding on your mortgage. For example, if your property is worth £200,000 and you owe £220,000, there is a £20,000 difference before selling costs.

Can I sell a property with negative equity?

It may be possible, but you need to establish how any shortfall between the sale price and mortgage balance would be dealt with. You should speak to your lender before committing to a sale.

Will my mortgage be cleared if I sell my house?

Not necessarily. If the property sells for less than the amount required to repay the mortgage, there may be an outstanding shortfall. You need to establish how this would be dealt with before selling.

Can negative equity stop me moving house?

It can make moving significantly more difficult because you may not have enough equity from your existing property to repay the mortgage and provide funds towards your next home. The options available depend on your circumstances.
MoneyHelper also provides guidance on what to consider when selling or moving home while in negative equity.

Does negative equity affect my credit rating?

Negative equity itself does not directly affect your credit score. However, if you fall behind with your mortgage or other debts, missed payments can have consequences for your credit record.

Should I sell my house if I am in negative equity?

Not necessarily. If you can afford your mortgage and don’t need to move, remaining in the property may be an option. If you need to sell, you should understand the likely shortfall and discuss your position with your lender first.

Can I remortgage if I am in negative equity?

It can be difficult to switch to another lender because the property value may not provide enough security for the amount you owe. Your existing lender may have options, so it is worth discussing your circumstances with them.
Thinking about remortgaging? Your options may be limited if you’re in negative equity. MoneyHelper explains some of the issues to consider.

Can Quick Property Sale buy my negative equity property?

It depends on the individual circumstances. Where the mortgage exceeds the property’s value, there may be a shortfall that needs to be addressed. We will not make unrealistic promises, but we’re happy to discuss the situation and explain what may or may not be possible.

Not Sure What To Do About Your Negative Equity?

Being told that your home is worth less than your mortgage can be worrying, particularly if you need to move or your circumstances have changed. But don’t assume that you’re trapped without understanding your options.

Talk to us confidentially. We’ll listen to your situation, explain what we can and cannot do, and help you understand the possible next steps.

No pressure. No obligation. No hard sell.

Important information:

The information on this page is provided for general guidance only. It is not financial, mortgage or legal advice, and every situation involving negative equity is different.

Before making any decision about your mortgage, selling your property or moving home, we recommend speaking with your mortgage lender and taking independent professional advice where appropriate.

For impartial guidance on negative equity, mortgages and your options, you can also visit MoneyHelper.