What is negative equity and how can you pay it off?

Negative equity is when the total borrowing against your home is lower than it’s value.

Property is in negative equity if it’s worth less than the mortgage secured on it. If you bought a property for £150,000 with a mortgage for £120,000 and the property is worth £100,000, you would be in negative equity. 

On the flip side, if you bought a property for £150,000 with a mortgage for £120,000 and it’s now worth £130,000, you would not be in negative equity. 

It’s estimated that there are around half a million properties in negative equity in the UK, although some areas are affected far more than others. To check if that’s your house ring your lender to find out how much you owe now. Next, get a local estate agent or surveyor to value your home, if the value of the property is below what you owe, then you are in negative equity. 

Houses photographed from above

Problems with negative equity 

If you want to sell your home, negative equity is more of an immediate issue. If you have savings to pay the difference between the value of your home and your mortgage that will help, but if not you might find it difficult. 

Most lenders won’t lend to you, making it difficult to remortgage to a fixed rate or cheaper deal. Instead, you will normally be moved onto the lender’s standard variable rate. 

Can you move house with negative equity? 

Whether you can move house if you’re in negative equity depends on several factors. Like, how much you have, the value of the property you want to move to, and how much if a deposit you can raise for the new property. 

Talk to your lender and find out what help they can give you. A very small number of lenders offer a negative equity mortgage. This will let you transfer your equity to your new property, but you will still be expected to pay a deposit.  

The pros and cons


  • You can move house without having to pay off the negative equity on your mortgage. This is particularly useful if you need to move for work or family reasons and can’t put it off.


  • You might have to pay early repayment charges on your existing mortgage.
  • There might be extra fees and charges, and your new mortgage might have a higher interest rate than your existing one.
  • Very few lenders offer them.

Reducing negative equity 

When tackling negative equity it’s a good idea to try and reduce it by overpaying your mortgage. Step one, check whether your existing mortgage allows overpayments. If so how much can you overpay without incurring an early repayment charge? Step two, work out how much extra you can afford to pay every month by saving elsewhere, or as a one-off.

If you’re in negative equity another option might be to rent out your home. would mean you keep the existing mortgage, although you will probably have to pay a higher interest rate.

If you want to find out more about managing your money, head to the community section of our blog.

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