In this brief guide, we are going to discuss Negative equity NI and how to get rid of negative equity in Northern Ireland property.

What is Negative equity?

Negative equity simply means when you owe more than something is worth. In regards to homes negative equity refers to when you owe more on your mortgage than your home is worth.

Negative equity has been a serious issue with most homes in Northern Ireland. Since the 2008 recession, which led to the housing market crash in Northern Ireland, house prices crashed by 55% in some cases. Over 60,000 homes in Northern Ireland are still thought to be in negative equity, with the average shortfall being around £35,000.

Negative equity NI

When speaking about Negative equity NI you could either be referring to the negative equity within Northern Ireland or the company “Negative equity NI”. 

We will briefly speak about Negative equity NI (the company) and then discuss the process of getting out of negative equity in Northern Ireland.

Negative equity NI (the company)

Negative equity NI is a Northern Ireland company which helps people in Northern Ireland get out of negative equity.

It currently has 5 stars in its  review profile.

A lot of people in Northern Ireland may have properties with negative equity if they took out an interest-only mortgage between 2004 and the financial crisis of 2008.

Negative equity NI is regulated by the FCA and you can find their profile on the FCA register.

Negative equity NI can help people with:

Interest-only mortgages

People who have outgrown their homes

People who are ill

People who are in financial difficulty

People who became accidental landlords

Negative equity NI can also help you if answered yes to any of the below questions

“ QUESTION 1

If your mortgage is interest only, will you struggle to repay the full amount at the end of your term?

QUESTION 2

Are you stuck in a property that is no longer suitable for you or your family?

QUESTION 3

Are you trapped in a mortgage with an ex-partner?

QUESTION 4

Is your buy-to-let property losing you money every month?

QUESTION 5

Is your interest only term running out?

QUESTION 6

Are you struggling to make your mortgage payments each month?

QUESTION 7

Would an interest rate rise make your mortgage un-affordable  “

With a lot of properties in NI suffering with negative equity a few companies seized upon the opportunity in order to help get customers out of negative equity but also to help themselves.

How does the Negative equity processing in NI work?

If you want to reduce the negative equity you have in your NI home using a third party here are the typical steps 

Negotiate to pay part of the difference between your home sale price and the outstanding mortgage balance with the mortgage lender. The negotiations will usually be on the basis that the mortgage was mis-sold to you.

There are various firms in NI who are offering to help you get out of negative equity and this is the same route they will follow. These companies usually charge a fee for their service. Some of the fees will be upfront but most will usually be once a deal has been agreed with the mortgage lender.

If you are using a firm to negotiate this process then you will usually need to fill a fact find form stating why you need to move. 

This could be because of a job, stress or the loss of a partner or family member. You will also state how much you make per month, what your monthly costs are and essentially what your monthly disposable income is.

A lot of mortgage lenders with Northern Ireland properties now have dedicated teams who are trying to get rid of properties which are suffering from Negative equity so you will not struggle to find some compromise with most mortgage lenders.

Sell your home for the best price. This is very important as the higher you get for your home the less you will have to potentially pay out of picket on the agreement you have reached with the mortgage lender. 

Some mortgage lenders may wait till you have sold the home before negotiating what you have to pay them to settle the debt whilst others may agree on a settlement amount with you before you sell your home as they have a good idea of how much you should be able to sell your home for.

Agreeing on a settlement price with the lender before you sell your home could be both positive and negative. 

It will be positive if you go on to sell your home for more than you agreed as a sales price with the mortgage lender as you can pay any excess towards the mortgage settlement amount but it would be negative if you end up selling your home for less than you agreed with the mortgage lender as you will now have to pay more out of pocket to clear the mortgage balance with the mortgage lender.

Start your repayment towards the agreed mortgage deficit to the mortgage lender.

If the property you have negative equity in is a buy to let property and not a residential property then you may find that getting a reduced settlement amount for it will be much harder as a Buy to let mortgage is not regulated and when looking into your income and expenses the mortgage lender will want to look into all equity you own in any other properties which you can potentially use to pay for the deficit caused by negative equity in your buy to let property.

What happens after the mortgage lender offers you a settlement?

Once a mortgage lender has offered you a settlement, there are some important things which you need to know.

If you pay this settlement on a monthly basis you will be put on a scheme which may later affect your credit rating and hence your ability to get credit in the future

Once you have successfully paid off the amount you agreed with the mortgage lender, the mortgage lender should then mark your mortgage account as a “partial settlement”. This means that you have come to an agreement with the mortgage lender and settle your mortgage account, likely not for the original balance. 

The partial settlement should be marked on your mortgage profile and will show on your credit account. It shouldn’t really affect your ability to get a mortgage but it may do so.

Most mortgage lenders will not start the process with you until you have had an offer on your house and they can make some data backed assumptions on what final price you may be able to get for your house. 

Some mortgage lenders will even send out a surveyor so they know what you should be looking to get for your house.

It’s a tough road to go through so deciding if you want to try and get rid of the negative equity in your Northern Ireland property yourself or if you need some “professional help” is vital.

Should you do this yourself?

Negotiating your Negative equity in NI is not as hard as it looks but there are companies who have first-hand experience of dealing with these mortgage lenders so you may see the benefit of using a company for these reasons.

If you are not good at negotiating then using a Negative NI company to help you reduce your negative equity.

The only downside to using a company is that they will charge you a fee for their services.

Most mortgage lenders prefer to work with customers directly rather than third party companies such as Negative equity NI.

Other ways to get rid of negative equity in NI

The below are other solutions which you may want to consider to get rid of negative equity in Northern Ireland.

Wait it out

Rather than trying to sell your property or negotiate a reduction in the mortgage balance you could simply wait it out and hope house prices rise but as with anything there is no guarantee of this and if house prices fall even more you could find yourself in a deeper hole.

Overpay on your mortgage

If you have a capital repayment mortgage then you could overpay on your mortgage and therefore reduce the amount of interest you owe the mortgage lender. This may reduce the amount you owe on your mortgage to below the property valuation or just above.

You Should check with your mortgage lender before you overpay as some mortgage lenders will charge you an early repayment fee when you overpay.

Increase the value of your home

Another way to tackle negative equity is to simply try and increase the value of your home by renovating it, extending it etc. This could make your home shoot up in value and become much higher than the mortgage balance outstanding on it. In some cases, you may even increase the equity in your home which you can subsequently extract if needed.

Rent your home out

Another way to finance the negative equity is to rent out your home or some part of your home and use the income to overpay your mortgage or finance your mortgage until the property market rebounds or until you are able to sell your home without too much out of pocket costs going towards the mortgage balance. You should first check with your mortgage lender to ensure you can rent your home without breaking the terms of your mortgage agreement.

Borrow the mortgage deficit

Another way of getting out of negative equity is to simply borrow the deficit between what your home is worth and how much your outstanding mortgage balance is from your family or friends and use this to repay the mortgage lender when you sell your home. The only issue with this is that you may not have enough money to put down a mortgage deposit on a similar property or any property and may need to downsize homes. Once you sell your current home

Get  a specialist mortgage

There are specialist mortgages which are not available to everyone, but there are some companies that will offer 100%+ mortgages to homeowners in negative equity. These mortgages tend to come with very strict conditions and high-interest rates. You should speak to a mortgage broker before doing this or at least seek some independent mortgage advice.

In this brief guide, we discussed Negative equity NI. If you have any questions or comments please let us know.

John Bate

John has 22 years of experience in financial services. This spans across financial research, financial services (As a qualified mortgage broker and underwriter), financial trading and sales at global investment banks. While working as a publishing research analyst, he covered European bank credit and advised institutional clients on investment strategies at both JP Morgan and Societe Generale. John has passed all three levels of the CFA (Chartered Financial Analyst) programme.