Negative equity means owing more on your mortgage than your property is currently worth, and MoneyHelper estimates around half a million UK properties are in this position today. This guide covers what it actually means for your credit and your options, why the risk in 2026 varies sharply by region rather than applying uniformly, and the practical routes available if you need to remortgage, move, or sell.
Figures below reflect MoneyHelper, ONS, Nationwide, and RICS UK Residential Market Survey data, current to mid-2026. This is general information, not financial advice; always confirm your specific position directly with your lender.
- What negative equity actually means
- The genuine regional divide behind the 2026 numbers
- Why it doesn't touch your credit score
- Remortgaging becomes considerably harder
- Moving house: porting your existing mortgage
- Selling while in negative equity
- What to actually do about it
- Frequently asked questions
1. What negative equity actually means
Negative equity is when the amount you still owe on your mortgage exceeds your property's current market value. If you bought a property for £250,000 with a mortgage balance now at £220,000, but the property has since fallen in value to £200,000, you'd be £20,000 in negative equity. The same numbers, but a property value of £230,000 instead, would leave you with £10,000 of genuine home equity, not negative equity at all, the gap between what you owe and what the property is actually worth is the entire story.
2. The genuine regional divide behind the 2026 numbers
National house prices were broadly resilient through 2025, up around 1.2% to 1.8% depending on the index, but RICS's February 2026 UK Residential Market Survey found surveyors turning notably more negative on near-term price expectations in specific regions: London at a net balance of -40%, the Southeast at -24%, and East Anglia at -26%. Set against this, surveyors in Northern Ireland, Scotland, and the Northwest of England were still reporting positive price expectations over the same period. If your property sits in one of the regions with a negative near-term outlook, the practical risk of slipping into, or deepening, negative equity is genuinely higher than the flat national average figures suggest; if you're in one of the positive-outlook regions, the opposite is true.
3. Why it doesn't touch your credit score
Negative equity, on its own, has no direct effect on your credit score, provided you keep up with your mortgage repayments. It's genuinely important to separate the two: negative equity is a statement about your property's value relative to your mortgage balance, while your credit score reflects your repayment history and other credit behaviour. You can be entirely up to date on every payment and still be in negative equity; the two are simply unrelated unless payments are actually missed.
4. Remortgaging becomes considerably harder
A new lender will only lend against your property's current market value, and if that value sits below your outstanding balance, there's a shortfall a new lender generally won't cover. This significantly narrows your ability to shop around for a better rate with a different lender, since most new lenders simply won't take on a loan that exceeds the security's current worth. In practice, your existing lender's own retention or product transfer offers often become the more realistic route while in negative equity, since they're not required to reassess the property's value in the same way a brand new lender would.
5. Moving house: porting your existing mortgage
Moving home while in negative equity is harder but not always impossible. Some lenders allow existing customers to "port" their current mortgage product to a new property rather than taking out an entirely fresh mortgage, with any shortfall added to the new borrowing amount. Whether this is available depends on your affordability, the size of the negative equity, the value of the new property, your income and employment position, and the lender's current policy. Even where porting is genuinely available, you'll usually still need to agree with the lender exactly how any remaining shortfall is dealt with as part of the move.
A handful of specialist lenders offer products specifically designed to let a borrower transfer negative equity to a new property without repaying the shortfall upfront. These are genuinely rare rather than a mainstream option, and typically come with more restrictive criteria and pricing than a standard mortgage.
6. Selling while in negative equity
Where possible, selling while in negative equity is generally worth avoiding: if you're forced to sell for less than your outstanding loan, you become responsible for making up the shortfall yourself, and you'll lose the deposit you originally put down, potentially leaving you unable to buy again straight away. Some lenders will allow the shortfall debt to be repaid over time through an agreed payment plan rather than demanding it in full at completion, which is worth raising with your lender directly before proceeding with a sale, rather than discovering the position only once an offer is already agreed.
7. What to actually do about it
- Confirm your actual position by checking your outstanding mortgage balance directly with your lender, and getting a genuine, current valuation rather than relying solely on an online estimate.
- Consider overpaying your mortgage if you have spare savings, since mortgage rates are typically higher than savings account rates, meaning money is often working harder reducing the mortgage balance than sitting in a savings account.
- Speak to your existing lender early if you're considering moving or need to remortgage, since they may have more flexibility than a new lender assessing the property at today's value from scratch.
8. Frequently asked questions
What is negative equity?
Negative equity is when the amount you still owe on your mortgage is more than your property's current market value. For example, if you bought a property for £250,000 with a mortgage balance now at £220,000, but the property has fallen in value to £200,000, you would be £20,000 in negative equity.
Does negative equity affect my credit score?
No, not directly. As long as you keep up with your mortgage repayments, being in negative equity has no direct effect on your credit score. Negative equity is a statement about your property's value relative to your mortgage balance, not about your repayment history.
Can I remortgage if I'm in negative equity?
It's considerably harder. A new lender will only lend against your property's current value, and if that value is lower than your outstanding balance, there's a shortfall the new lender generally won't cover. This significantly narrows your options to shop around for a better rate, and in many cases your existing lender's own retention deals become the more realistic route.
Can I move house while in negative equity?
It's possible but harder. Some lenders allow existing customers to "port" their current mortgage product to a new property rather than taking out a fresh mortgage, with the shortfall added to the new borrowing, subject to affordability and the lender's current policy. Even where porting is available, you'll usually still need to agree with the lender how any remaining shortfall is dealt with.
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