If my house is in negative equity, will I be able to get any profit from the sale?

 

Negative equity is when the amount of your outstanding mortgage exceeds the market value of your home. This is usually a consequence of property prices falling or if you took out a >100% mortgage on your property.

In such situations some people simply keep their heads down and continue to make their mortgage payments until house prices start rising again and the market value of the property increases.

If, however, you are still keen on selling your property it is worth consulting a conveyancing solicitor to advise you on steps that need to be taken. There are some options available that may enable you to minimise your losses or even turn a profit despite your negative equity.

Option 1: Renegotiate ahead of the sale

Your conveyancing solicitor can negotiate on your behalf with the lender as often repossession is the least satisfactory outcome for the mortgage company.

Often a lower settlement amount can be negotiated, meaning that the proceeds from the sale of your house still could cover the outstanding mortgage and leave you in a better financial position to start again.

Option 2: Transfer the balance

If you are selling your property and were intending on using some of the proceeds to pay off your existing mortgage and attain another mortgage to purchase a new property, your lawyer may be able to assist you.

They can negotiate with the mortgage lender on your behalf to have the negative equity of your former property added to the mortgage of new property. This is not a guarantee, however, and will depend on the mortgage lender.

Option 3: Sell to a property investor

A final option would involve your conveyancing solicitor searching for a property investor to purchase your property as opposed to a regular buyer. An investor may be willing to take a small loss in purchasing your property if the home can be turned into an income-producing property.

In all of the above situations, you should bear in mind that you may not be able to make any profit on the sale of your property; you will, however, be in a better financial position than you were at the start. If you require other advice on selling your property, visit our conveyancing pages.

If you would like our help in finding local conveyancing solicitors to help sell your property please call us on 0808 129 5759 or complete the web-form above to speak to one of our advisors.

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