What is negative equity? Negative equity is a term that often refers to a situation in which a homeowner finds themselves whereby the amount of debt on the property is MORE than the value of the property.
With a falling market, there are always property owners that are in negative equity. In America, at the height of the Global Finance Crisis there were millions of people who owed more on their property than the property was worth.
For example, the mortgage on the property is $275,000 and the market value of the property is $250,000. This would result in the homeowner being $25,000 in negative equity.
