We're in a similar situation to you. Except we're older, by ten years and have three children. We're not in negative equity but there's a 'sword of Damacleus' hanging over our heads, in that the company my husband works for depends on the 'Building Industry'! So you can guess how well the're doing!! There's a very high chance he will be out of a job within the next 6mths. As we could sell now and rent for a year or two before buying a smaller house, we could be mortgage free. So with that in mind, we've put our house up for sale. We will be taking a risk, but if we don't and he looses his job, the situation will be worse. What's galling is, we're giving up a tracker with BOS, however the aim is 'mortgage-free'. I wish his job was secure, but even if it was, our standard of living will be much better without a mortgage as with the drastic paycuts/loss of benefits he's taken, we wouldn't get by without 'childrens benefit' every month and we certainly can't save for the future or a rainy day. Mortgage-free, owing nobody is the dream. Our only problem is, NOBODY is buying! I feel for people who have lost their jobs and are in negative equity, we're lucky that we didn't fall for the lure of easy money that the banks were pushing on everyone. We've worked hard all our lives and this whole mess is not our making, no matter how some people try to blame 'wreckless borrowers'. The truth is the banks 'lost their heads' with reckless greed and the government were too stupid/incompetent to notice.