What does 'Negative Equity' mean when buying a property?
Find out what Negative Equity means when you are buying a property. 'What does Negative Equity mean?' plus over 150 other property related terms and jargon in plain English
When the value of your home falls below the value of the loan or mortgage secured on it then you are in negative equity - you owe more than your asset (the property) is worth.
If your home is worth £200,000 but the mortgage is £220,000 then you have negative equity of £20,000.
As local markets rise and fall on an annual basis, but rise in the long term, many people move in and out of negative equity without realizing it. The situation only becomes an issue if the owner needs to sell and does not have other funds to cover the difference.
To learn all the lingo you need to purchase a property the smart way pick up a copy of my ebook How to Really Buy a Property.