How negative equity mortgages work (the bit banks won’t tell you)

There is a lot written about negative equity mortgages, what nobody seems to cover is how they actually work or get underwritten so here is a primer on it, usual caveats apply, this isn’t set it stone, it’s the rules of thumb that will ensure your application is possible with the greatest number of banks.

Naturally the banks don’t release this information, they want it to be a ‘case by case’ product, but we have spotted the trend in terms of how they are assessed which inspired this post.

First the bad news, if you are in negative equity and want to move house you’ll need to have a deposit. Even though you might be ramping up to 175% LTV you can’t do this without a deposit on the 2nd property (that you’ll be moving into).

You’ll also need to ensure you don’t go outside of the maximum LTV allowable in the institution you are applying through.

The easiest way to figure out if your …

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