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<\/a>What should you do if you find yourself in the negative equity trap?<\/strong><\/p>\nFirst and foremost, a couple of important points: your mortgage lender wants his money, not your house, hence repossession is very much the final option. The bailiffs will only be despatched to your door as a last resort. Also, house prices fluctuate \u2013 what is falling now may be rising in a few years \u2013 and negative equity will affect those who have to sell their homes while in the trap. If you can stay put for a while, do so, and you should find yourself climbing out of the zone in time.<\/p>\n
Try and reduce the debt<\/strong><\/p>\n At the first signs of negative equity \u2013 and for those who are unsure, this is the point where the market value of your property becomes less than the mortgage secured upon it (and any other loans that may use the property as collateral) \u2013 the thing to do is take stock. Investigate ways of cutting the debt \u2013 many mortgage lenders will have an option available to pay off a chunk of the mortgage, generally up to ten percent \u2013 by using available funds. Of course, you should not consider taking out further loans, but if you happen to have savings then it may be worth using these to reduce the mortgage amount repayable in the first instance.<\/p>\n If paying off some of the loan is not an option you should still contact your lender, and straight away.<\/p>\n Work with the lender<\/strong><\/p>\n There are certain guidelines in place that lenders have to follow with regard to homeowners in trouble with repayments, and these are there to help both parties. As pointed out above, the mortgage lender does not want to go through the costly and time consuming route to repossession, but to get back his money. This is best done by working with the borrower, and devising a repayment plan that will keep up repayments to a degree, with the balance paid off over a selected period of time.<\/p>\n Taking independent advice is always a sensible option, and the Citizens Advice Bureau can be a useful source of help as they have personnel trained in negotiating with lenders in an effort to come to a viable agreement.<\/p>\n Don\u2019t take out a loan!<\/strong><\/p>\n Things not to do include taking out loans, or getting involved in debt consolidation agreements. Keep to dealing with your mortgage lender, as they are the one you are legally bound to.<\/p>\n Do not, either, hand back your keys. This course of action has no benefit to anyone \u2013 especially you. Talk to your lender, and be open and honest, and an agreement will be found in most cases.<\/p>\n Should the situation get as far as you being issued with court papers, all is not lost. It could be that you should have spoken to your lender before, but doing so at this point may still result in a solution being found.<\/p>\n