We are currently experiencing technical difficulties with our telephone system.
We apologise for any inconvenience and are working to resolve this as soon as possible.
This website uses cookies. By continuing to browse the site you are agreeing to our use of cookies. Continue

How does negative equity affect you?

Negative equity and what it means for you

Secured Loans > Our Loans > Low Equity Loans > Negative equity and what it means for you

Find out what negative equity means for you and what you can do about it.

Negative equity can often get in the way of your plans to move or remortgage. If your home is in negative equity, we take a look at how you can start looking ahead and moving forwards.

What is negative equity?

Negative equity occurs when your property is worth less than the mortgage you secured for it. For example, if you bought your home for £200,000 with a mortgage for £180,000 and the property price drops to £170,000, you would be in negative equity.

Falling house prices commonly cause negative equity. After the 2008 financial crash, property prices fell by around 20% and left many homeowners dealing with negative equity. You could also end up with negative equity if something happens to reduce the value of your property, like faulty renovations.

How can I find out if I’m in negative equity?

You might not always realise if you are in negative equity. To find out the equity in your home, you will need to find out what’s left owing on your mortgage and carry out a home valuation.

It’s easy to contact your mortgage lender and find out your remaining balance. Once you’ve done this, you can seek a home valuation. You can get a rough estimate online for free or you can arrange for a surveyor to value your property.

If the amount you have left to pay towards your mortgage is higher than the estimated price of your home, you could be in negative equity.

How does negative equity affect me?

Negative equity typically affects homeowners when they are looking to sell the property or switch mortgage deals.

You can’t move home as easily

Unless you have the money available to pay the difference between the value of your home and your mortgage, you could struggle to move house.

You might struggle to remortgage

Once your mortgage deal comes to an end, it’s normal to switch to a better rate. If you’re in negative equity, your lender may just move the mortgage to their standard variable rate – which could be expensive.

It’s harder to find a secured loan

If you were considering a secured loan to cover upcoming costs, you could struggle if you have negative equity. That’s because you need to offer collateral for lenders to secure the finance against, but negative equity means you don’t have any collateral to offer.

How can I get out of negative equity?

If you’re in no hurry to move house, it can often be best to wait until your negative equity improves on its own. If house prices have fallen across the market, you could find that the economy picks up in due time. However, if you’re looking to move or remortgage soon, you could look into these tips to reduce your negative equity.

Increase the value of your home

There are various ways to boost the value of your home. From adding a conservatory to revamping your kitchen, home renovations can increase the value of your home and reduce your negative equity.

Make mortgage overpayments

If you have any available savings, you could put them towards reducing your negative equity. You could contact your mortgage lender and see if you could pay a lump sum towards your outstanding balance.

Rent your home

If you need to move home but can’t afford to sell, renting out your home could be an option. This would allow you to move and earn income from your property until you’re able to sell.

Secured loans and negative equity

Having low or negative equity can make it harder to find the finance you need. At Evolution Money, we won’t automatically turn you away if your home has fallen in value. We’ll listen to your circumstances and aim to offer you a secured loan that suits you, at a rate you can afford.

Warning: Late payment can cause you serious money problems. For help, go to moneyhelper.org.uk

How our customers rate us

We’re proud of the high standard of our customer service and believe that each of our customers should be treated as an individual.
Evolution Money 96 out of 100, based on 178 reviews over the past year. 178 user reviews. Read our reviews

Members of the The Finance & Leasing Association

FLA logoWe are a member of the FLA (Finance and Leasing Association) and subscribe to its lending code.


Feeling social? Check out our social pages!

Tweet us on Twitter
Like us on Facebook
Add us on Google+

Our Address

Evolution Money,
9 Portland Street,
M1 3BE

Registered Company Number: 06987852

Contact by Phone

General Enquiries:
0161 814 9158

0161 814 9165

Contact by Email

Evolution Money Limited is a licensed credit broker and service provider to Evolution Lending Limited. If your application doesn’t meet the underwriting requirements of Evolution Lending Limited we may pass your information to other lenders and brokers. Evolution Money Limited is a company registered in England & Wales, registration number 06987852 and registered at 9 Portland Street, Manchester, M1 3BE. Authorised and regulated by the Financial Conduct Authority, firm reference number 708324.

© 2022 Evolution Money | Cookies | Complaints Policy | Breaking Down Our Loans | Terms & Conditions | Fair Processing Notice | Sitemap
Start Here
Please wait

Please wait

Don't leave just yet!

Evolution Money are a multi Award Winning UK finance company with thousands of happy customers!

Award Winning

Our friendly loan advisors can let you know if you're eligible for a loan without affecting your credit score. Why not give us a call today!

Freephone 0800 144 8188

Back to Evolution