Negative Equity: does this have an effect on your Credit Rating?

A

ajapale

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I was watching TV3 today about noon and there was a fairly bright articulate man on who among other things said that negative equity has a serious effect on your credit rating.

He stated that even if you have a ************************* credit history if your mortage is in negative equity then you will have difficulty benefiting from some finance arrangements such as are availiable at Harvey Norman etc.

The conventional wisdom around here is that NE should have no impact if you do not intend selling and are able to make the repayments.

What do AAM's think.

What is the name of the articulate man? The other presenters (Alan?..Martin?) kept interrupting their guest so it was difficult for him to complete his sentences.
 
Unless the ICB have been round to your house with a valuer in the last weeks , I wouldn't worry about it.
 
I was watching that programme too and was a bit worried after hearing what that fella had to say about negative equity and credit ratings. I did wonder how they would know though.
 
It kind of makes sense these guys usually ask you what is the current value of your home? and how much is outstanding on the mortgage?

I presume they ask these questions in order to ascertain how much protection they have if you default on your obligations under the credit agreement. If the credit agency obtains judgment against someone who has equity in their home the credit agency can seek an order for possession and sale of the home pay off the mortgage and put the balance towards discharging the liabilities under the credit agreement and legal costs.
 
Hi AJ

I had heard that recently as well and I was surprised at it.

YOu could email TV3 and ask them and complain about the interruptions.

I suppose it does make sense not to lend to people whose liabilities exceed their assets.
 
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