With the average house price having fallen more than 20 per cent since its peak during the summer of 2007, thousands of homeowners are now finding themselves in negative equity (ie their mortgage is worth more than their property).
It's an unpleasant place to be – not least because it leaves you unable to sell your home, unless you've got the cash to make up the shortfall between your home loan and the property's current value. However, if you think you may be in negative equity, there's no need to panic – you may have more options open to you than you think.
Negative equity is one of the common problems caused by not putting enough of a down payment on your home or taking out the wrong type of mortgage. Although banks will only give you a home equity loan equal to the approximate equity in your house at the time you open up a home equity line of credit, you could end up in the negative if the housing market takes a dip downward.
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