Negative equity concerns 25 percent of mortgage holders

As house prices continue to fall, 25pc of mortgage holders are concerned about negative equity according to recent findings by FainInvestment.co.uk.

With house prices falling by a further 1pc in January, home owners are finding that the equity in their homes is diminishing. Particularly vulnerable are those who bought their homes at the peak of the property market.

FairInvestment found that 11pc of mortgage holders are increasingly concerned that the value of their home is now less than their mortgage.

Those with interest only mortgages, which do not reduce the mortgage loan amounts, also hope that the value of their homes remains greater than the outstanding mortgage.

Negative equity only becomes a problem if you have to move home and twenty seven percent of people questioned in the survey said that as long as they can pay the mortgage, they will remain in their existing home in the hope that the market recovers.

With interest rates at historic low levels, it makes sense to overpay your monthly mortgage if at all possible. This reduces your mortgage loan size and helps to reduce the risks of negative equity.