Remortgages 'refused due to negative equity'

Date:Friday 13th February 2009
Author: Rachel Fletcher

Homeowners in negative equity are unable to find remortgage deals, an expert has said.

This is according to Bilal Afzal, an independent mortgage adviser for Surrey Independent Financial Services.

"It will be highly unlikely to sell a house at a price which could redeem the whole mortgage amount on the property, which means they will have to put some money down either to remortgage or sell the house," he explained.

Negative equity is when a mortgage is worth more than the value of the property.

The UK Insolvency Helpline says that there is no easy answer to the problem.

According to the Financial Services Authority's Financial Risk Outlook 2009, negative equity will present a problem to some mortgage holders due to falling house prices.

Should there be a 30 per cent drop in house prices from the end of 2007, the estimate is that more than two million people with residential mortgages would go into negative equity.