Puzzled with industry jargon? Browse our glossary section for commonly-used terms and start to understand what the complicated vocabulary used in the world of personal finance means to your money matters.
Negative equity
You are said to be in negative equity when you buy something for a lot more than it's worth.The term is used to describe those homeowners who have taken out a mortgage on their house which then decreases in value.
An example of this would be buying a house for £200,000 and taking out a mortgage on the property for this amount, only for the house value to drop to £150,000 a couple of years later.
If the homeowner wanted to move, they would be forced to sell at a loss or stay put and pay off their mortgage bills.
