Mortgage borrowers 'can overcome negative equity'

Mortgage borrowers can overcome the issue of negative equity on their homes, according to a financial expert.

David Kuo, the head of personal finance at Fool.co.uk, has stated that while capital loss is "beyond the control" of homeowners, borrowers can tackle equity by reducing the size of their outstanding mortgage compared to the value of the property.

According to figures compiled by the advice website, the predicted 20 per cent fall in house prices which could take place this year will bring the price of a property down to the level it was at in April 2004.

However, the expert stated that falling house prices are "not disastrous".

"A 20 per cent fall in house prices across the board will narrow the gap between the value of your home and a property further up the housing ladder. It will make up-sizing more affordable," he explained.

In a recent interview with the Daily Telegraph, the editor of Which? Money, Martyn Hocking, said that shopping around for mortgage deals can help consumers reduce the impact of the credit crunch on their finances.

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