Can I Remortgage With Negative Equity?

You bought a house and your fixed-term mortgage contract has come to an end. You want to remortgage, but you’ve fallen into negative equity. It’s easy to fall into despondency in this situation, but as we’ll reveal in this guide, there are still options available. It’s a tricky situation, but there are always steps you can take to make your financial circumstances fall back in your favour. In this guide, we’re answering whether you can remortgage when in negative equity, and what your options are.

What is negative equity?

Negative equity means the outstanding balance on your mortgage is more than the market value of your home. It essentially means you’re in debt.

How do you know if you have negative equity?

If the value of your property is less than what you owe, then this means you are in negative equity. By getting a property valuation and checking your mortgage statement, you can compare the amounts. Simply, subtract the outstanding mortgage balance from the valuation price and you’ll have your equity amount. Most of the time, it should be positive. But, if you’re in the difficult position of being in negative equity, help is always available.

Is it bad news?

A lender will be less likely to approve a remortgage deal if they would need to lend you more than your home is worth. This means remortgaging onto a fixed rate or a cheaper deal with negative equity will be more difficult. Negative equity is particularly a problem if you want to sell your home. But, as we’ve listed below, there are steps you can take to improve your situation.

What are your options?

If you’ve been moved to the lender’s standard variable rate, you’ll likely want to secure a better rate. But, with negative equity, you may be worried about how to remortgage for the better.

• Get financial advice – by speaking to a financial advisor, you can discover ways to reduce your negative equity and bolster your savings.
• Look for ways to make money – there may be ways for you to bring in extra income, such as renting out a room in your property. A mortgage advisor can talk you through how this works and check if your lender permits this.
• Look for a specialist remortgage broker – a specialist remortgage broker will be able to give you access to more flexible lenders, including those that provide negative equity remortgages.

Can you roll negative equity into a new mortgage?

Fortunately, some lenders will allow you to move negative equity over to a new mortgage.

Speak to the team at Agentis today to discuss negative equity remortgages. As combined mortgage and financial experts, if you’ve fallen into negative equity, we can help. Book your initial consultation with our mortgage broker Peterborough team.