Negative equity tips offered

Homeowners facing the threat of negative equity on their properties have been offered some debt management advice by an industry insider.

Andy Pratt, the chief operating officer at Alexander Hall, noted that the risk posed by the situation – in which a house becomes worth less than what was paid for it – depends on individual circumstances.

Those that are forced to move home due to employment reasons or growing families may be affected, he said.

Mr Pratt explained that if a property bought for £270,000 is sold for £250,000, then the vendor could still owe £20,000 to the mortgage lender.

In these circumstances, borrowers may attempt to carry over the debt when they buy a new home or look to save money elsewhere to make up the deficit, he suggested.

His comments came following figures from the Council of Mortgage Lenders showing that approximately 900,000 houses are currently in negative equity.

By Jamie Price

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