Lenders grow positive about negative equity
Sunday 29 September 1996
More than 760,000 borrowers owned properties worth less than their mortgages in the second quarter of 1996. But Rob Thomas, a building society and housing analyst for UBS, predicts that house prices will rise by 7 per cent by this December, and 10 per cent in the following 12 months. This should reduce the number of people with negative equity to 500,000 this year, falling to 90,000 by the end of 1997.
This is not much consolation for those still saddled with a shortfall. But as lenders become more confident about the state of the housing market, more are prepared to help borrowers work out a way to reduce their negative equity, or to move their debt to a new house.
Patrick Bunton, of London & Country, independent mortgage brokers in Bath, says the first step is to check if your lender offers a scheme designed to help you pay off negative equity or carry it over to another property.
He says: "Compare whatever scheme your lender offers to that provided by the Cheltenham & Gloucester. This is the benchmark scheme as far as we are concerned, offering the best terms on the market."
The Cheltenham & Gloucester negative equity mortgage allows borrowers to sell their home and transfer negative equity to the new one by borrowing up to 125 per cent of the new property's value. Interest is charged at the lender's standard variable rate (6.85 per cent) and C&G does not have an application fee, mortgage indemnity insurance premium or survey fees. The scheme is open to all borrowers, not just C&G customers. For more details about this scheme ring 0800 272131.
Abbey National's Mobility Mortgage is typical of the schemes provided by lenders for their existing customers. This enables borrowers to move house by borrowing up to 135 per cent of their new property's value. But borrowers will probably have to pay for mortgage indemnity insurance, cover that protects the lender against loss if the borrower defaults, on 25 per cent of the loan.
Again interest is charged at the bank's standard variable interest rate of 7.04 per cent to 6.94 per cent, depending on the size of the loan. Borrowers can repay chunks of the loan as and when they can afford to without penalty.
Most lenders will allow borrowers to "overpay" their mortgage, putting as little as pounds 50 extra into the loan account on a regular basis to reduce the negative equity. Do check whether your lender stipulates a minimum extra payment and when the money will be attributed to your account.
Justin Bieber was one of the hardest hit
- 2 Harry Potter fans can apply to the Hogwarts-inspired College of Wizardry
- 3 Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
- 4 Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
- 5 Orange Wednesdays are no more
Weather bomb in pictures: Storms cuts power for tens of thousands – and snow is on the way
Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
Russell Brand was rendered speechless on Question Time by this man
Fury at Airbus after it hints the super-jumbo may be mothballed
Disgruntled RBS worker writes hilarious open letter to Russell Brand after anti-capitalist publicity stunt leaves him hungry
Shock poll shows voters believe Ukip is to the left of the Tories
Nigel Farage's approval rating hits 'record low' as popularity suffers in wake of Ukip sex scandal
Ukip candidate jokes about 'shooting peasants' in racist and homophobic rant
Pakistan school attack live: Taliban kill at least 132 children in 'horrifying' massacre
Sony hack: Angelina Jolie branded 'seriously out of her mind' in further embarrassing leaked email saga
iJobs Money & Business
Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...
Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...
£32000 - £35000 per annum + benefits: Ashdown Group: Marketing Services Manage...
£Neg. (DOE) + Excellent Benefits: Guru Careers: A Finance Account Manager with...