The equity in a property is best defined as the net surplus value that remains after any secured loans against the property are deducted from the property’s market value.
For example, where a home is worth £225,000 and the owner has an outstanding mortgage on the property of say £125,000, the homeowner can be said to have ‘equity’ in the property equating to £100,000.
If property values fall or the mortgage balance increases (perhaps during a period of non-payment) then the equity in a property will decrease. Eventually, the equity will reduce to nothing and possibly even become negative. For example, the homeowner may buy a house for £150,000 with a mortgage of £125,000. Values may fall by say 20% meaning the home is now worth just £120,000. With a mortgage outstanding of £125,000 there is a negative equity in the home of £5,000.
Nowadays banks and mortgage lenders are under an obligation to ‘stress test’ their lending criteria. Hopefully this will enable house buyers to raise mortgage funds based on sensible Loan to Value and income multiple parameters.
For more information contact us or speak to a mortgage adviser on 01628 507477.
The Financial Conduct Authority (FCA) has shared new changes to mortgage rules with the aim to simplify remortgaging, and encourage competition within the mortgage market.
5 days ago
Lloyds Banking Group has jumped on the bandwagon to boost lending for first-time buyers as they allocate an additional £4 billion to help first-time buyers on to the property ladder.
As the Loan to Income (LTI) cap has been increased to 5.5 times income, applicants who fit the First Time Buyer Boost criteria could borrow up to 22% more.
The government is introducing mortgage reforms to boost homeownership, stimulate economic growth, and make the housing market more accessible, especially for first-time buyers.
Chancellor Rachel Reeves has announced the most significant mortgage reforms in over a decade—great news for those dreaming of homeownership.
Nationwide ease their ‘Helping Hand’ mortgage designed to help first-time buyers get onto the property ladder by allowing them to borrow up to six times their income.
14 days ago
Keeping the kids entertained over the six-week summer holidays isn’t always easy, especially with the cost-of-living making it even more difficult. Below is a list of fun, inexpensive ideas to do over the break
The Financial Conduct Authority (FCA) has published a discussion paper about the future of the mortgage market in a bid to improve access for first -time buyers, self-employed, and those borrowing in retirement.
Ever wondered where the most reasonably-priced towns for families to buy are? Property company, Zoopla has identified the top 10 towns for families to live in the UK by looking at the most affordable towns, and how many people are looking in that area.
18 Jun 2025
There was a 32% increase last year in 100% loan-to-value (LTV) mortgages which are mortgages that require zero deposit. According to a recent report by chartered accountants and business advisers, Lubbock Fine, the reason behind this is buyers simply struggling to save enough for a deposit.