negative equity

[babalicious]

i just wondered what exactly this means, i know it means that my house could be worth less than i paid for it, but does it change anything for us, we are not planning on selling but we do have 2 equity release loans and a personal loan secured on the house, we bought the house for �37k in 2001 and borrowed a further 40k since meaning 77k is secured on the house. if the value of the house goes under 77k do we have anything to pay or will it only affect us if we want to sell. i'm so confused. help?

[Ethel]

If you are not selling it is meaningless and doesn't affect you at all unless you want to take out another loan or can't afford to repay your debts and your house is repossessed.

[R1Geezer]

It simply means you owe more than it's worth. As ethel says that only becomes an issue if you need to move, borrow more or get reposessed. Most people with cars on finance are in negative equity same thing!

[WoWo]

Just wanted to point out that while what Ethel and R1Geezer say is true, it is also the case that it is unlikely you will be able to change mortgage provider if you are in negative equity.