A short sale could be the answer to your loan problems
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IT IS not a great situation to be in, but just being in negative equity alone won't mean you will lose your home, nor will it affect your credit rating.
But what if you are in the truly unfortunate situation of being both behind on repayments as well as being in negative equity?
In his recently published 'A Repossession Guide for Irish Homeowners', Karl Deeter of Irish Mortgage Brokers, lists a number of options for homeowners who are facing repossession.
One of these is a "short sale", which applies specifically when a person is in negative equity.
So if you owe €220,000 on your mortgage but the house is only worth €200,000, then your lender may agree to let you sell the property at that price if you accept responsibility for paying back the €20,000 shortfall.
"The lender might be happy to see you sell it and keep the €20,000 left over as a loan in your own name," says Mr Deeter.
"In any case it's better for them to be on the hook for €20,000 than €200,000."
However, he says such sales are not yet common in Ireland, although he suggests that some lenders may be starting to look more favourably on it as a way to encourage some clients to clear their loans.
