100% Mortgages

H

househunter1

Registered User
Messages
52
Hi

I seen on the news recently that lots of FTB who have taken out 100% mortgages will face negative equity, can anyone shed some light on this for me?
Thanks
 
Negative equity means that the resale value of the property is less than the outstanding mortgage. If you sell up in such a situation then you lose money.
 
FTB's...
those of us who have taken out 100% mortgages. people are saying there has been a drop in prices, so if we sell in a few years we are going to make a loss not a profit?
 
100% mortgage was your own choice so you presumably assessed the risks at the time? Whether or not you have "made a mistake" remains to be seen. But negative equity is largely of academic interest as long as you can service the mortgage repayments and are not planning to sell up for the forseeable future. If you had taken an 80% mortgage, stumped up the 20% deposit yourself and sold later at less than what you paid you would still make a loss (albeit without having to pay interest on the additional 20% capital and having already secured ownership of a chunk of the equity in the property).
 
You must log in or register to reply here.
Back
Top