What % do house prices need to fall before you are in negative equity?

[DimPrawn]

Capital? What's that like? London innit?

[TykeMerc]

I voted 50% as that would mean my mortgage would be slighly more than the house value. Literally speaking that's confusing as I have an offset mortgage with <£8K outstanding.
As I pay higher rate tax I find offset to be better value on my savings than most other methods.

[Chugnut]

How are you paying off the capital?

Interest only monthly payments, but with occasional bulk payments?

[sasguru]

Interest only monthly payments, but with occasional bulk payments?

Lets hope so. Of course negative equity still applies.

[SallyAnne]

How are you paying it off in 5 years if you have an interest only mortgage?

The mortgage is linked to our joint account. We put £2k in each every month, with bulk payments each year.
It'll probably be paid in 4 years really, but we wanted to account for the wedding costs this year.

[SallyAnne]

Interest only monthly payments, but with occasional bulk payments?

Yes - spot on

[SallyAnne]

Lets hope so. Of course negative equity still applies.

Yeah I guess it does really. We still have to pay off £280k, even if our house plummits to being "worth" less than that. (Cause that's what we paid for it).

The thing is, I coudn't care less! I have a 6 bedroom 3 storey house in the centre of a city I love - it's never going to be "worth" less than £280k to me.

"Negative Equity" as a theory only exists if you want it to


Sal in <if a tree falls in the forrest and noone is around to hear it> mode

[sasguru]

The mortgage is linked to our joint account. We put £2k in each every month, with bulk payments each year.
It'll probably be paid in 4 years really, but we wanted to account for the wedding costs this year.

Negative equity still applies though. If the value of the house falls below (purchase price - payments already made) you are in negative equity. Although I guess if you are paying it off in 5 years then you are paying it off faster than prices are falling?
It's interesting - never had to think of it like that.

[TheBigYinJames]

"Negative Equity" as a theory only exists if you want it to

It only exists for BTLers who can't cover the mortgage with reduced rents, and for buyers who mortgage a large fraction of the value of the house to buy it and then have to get rid of it in a hurry.

If you don't have to sell, it's irrelevant.

[sasguru]

Yeah I guess it does really. We still have to pay off £280k, even if our house plummits to being "worth" less than that. (Cause that's what we paid for it).

The thing is, I coudn't care less! I have a 6 bedroom 3 storey house in the centre of a city I love - it's never going to be "worth" less than £280k to me.

"Negative Equity" as a theory only exists if you want it to


Sal in <if a tree falls in the forrest and noone is around to hear it> mode

That's the right attitude actually.
Although I can't get over £280K for a 6-bed town house.