Even for those property buyers who have taken out a reasonable and realistic mortgage, and who have understood the financial commitments they are getting in to, can fall victim to this financial situation.

In more stable times property prices generally increase. Even when buyers take out a 100% mortgage to pay for a property, within a few years, the house is worth much more than the mortgage being paid on it. The property can then be used as security on other loans for additions or improvements to the property such as fitting a new kitchen or an extension. The benefits of this are spread throughout the economy as home related industries such as building trades, furnishings and DIY to name but a few benefit from high levels of consumer spending. Confidence leads to more money coming in to the housing market via additional loans. Home owners have the freedom in this type of sellers market to move home when they need, for example to find a better job.

There is no easy solution to the problem of negative equity. The home owner may need to move to a bigger house or need to move to a different area for employment reasons.

Obtaining additional loans or a remortgage on the property to make home improvements could prove impossible.

Many people during the economic downturn are struggling to make repayments on their mortgage, and due to the negative equity cannot sell. Any negative equity must be made up for by the home owner.

However, when the home owner is faced with negative equity and unable to keep up their mortgage and loan repayments, they may still have the option of remaining in their own home with a sell and rentback scheme. Many people are finding they can continue to live in their own homes and actualy avoid repossession.