Around a fifth of UK mortgage holders have borrowed 90 per cent or more of their property’s value, which could potentially put them in danger of negative equity, figures have shown.
Research compiled by Fairinvestment.co.uk found that 21 per cent of homeowner loan borrowers took out products with a loan-to-value (LTV) of 90 per cent or over.
It also discovered that 13 per cent of mortgages had LTVs of 91 to 100 per cent, while three per cent of people held loans with 125 per cent LTVs.
The firm noted that if house prices continue to drop, these homeowners are at risk of falling into negative equity.
Chartered financial planner Sharon Bratley offered some debt management advice that could help combat the issue.
“Negative equity can be concerning, so, as interest rates fall – taking mortgage rates with them – it could be advisable to those with a high mortgage LTV ratio to increase their mortgage payments,” she said.
Recently, HSBC wrote to customers to explain how making such overpayments can help to lower debt.
By Jamie Price