Can I move if I'm in negative equity

H

hennesb2

Guest
Hi, Without going into specifics....I am currently in negative equity (dont know how much, havent had the house officially valued)....so my understanding is that my house is worth less that I owe on it...If I want to move to a new house but the new house is of comparable value to the one I am selling, is this straight forward? Surely negative equity doesnt even come into it if the houses are a similar price? So e.g I owe 250K on my house now worth 200K! Can i sell me house for 200K and buy a different one for 200K and carry on in negative equity but in a new home?
 
You would need to arrange a loan with the bank for the portion that is not covered when you repay your mortgage having sold the house.
Whether you'd get that loan or not would be dependent your ability to pay, and then the next mortgage might be affected by you already having this extra debt.

You can't just transfer a mortgage onto a new property. Each property has to be valued and a new mortgage applied for I would think.

Otherwise what would happen if there is a gap 'between houses' as such? You'd have one house sold to someone else and the mortgage you had being discharged on it. Then you are floating about owing the bank the 200k for the house, but neither you nor the bank having ownership of the asset attached to it.
The bank would be taking on a huge risk and with no gain except to do the favour of you wanting a different house than the one you are in, if you see what I mean. Now I am a lay person and no expert but that's just how I'd imagine the scenario would be.
 
Oh right thanks. I thought a mortgage applied to the person rather than the property, so my debt would just move with me!
 
The debt is yours but you provided a property as security. If sale of the property does not clear the mortgage on it, then you are obliged to clear the balance from your own resources in order to make the property unencumbered. Though the norm nowadays is to agree a house purchase and a mortgage almost simultaneously this was not how mortgages were first given. The borrower had clear title to the property and could offer it as security. The use of a mortgage as a tool for funding the purchase of the property is a later development.
 
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