Debt Glossary : Negative Equity
Negative equity is the situation where more is owed on a property than it is worth on the open market.
For example, if a property is worth £100,000 but the combined amount owed on the mortgage and a secured loan is £110,000 then the negative equity amount will be £10,000.
The most well known examples of negative equity are those encountered after a housing price crash, as was widespread in the 1990s, but it can also occur voluntarily if the homeowner chooses to take out one of the secured loan packages available which permit borrowing up to 125% of your property's value.
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