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Sharp falls in house prices in recent times mean many are facing the dreaded prospect of negative equity. Many people have been releasing equity in their homes not just for buying luxury goods but for simply funding their basic lifestyle. Is negative equity really a problem for everyone unlucky enough to have it however? If you are managing to hold on to your job and have no plans to move house then you can just sit tight and continue to pay your mortgage - you will not be affected so badly.

If you wish to move to bigger and more expensive home then your options may be limited depending on the figures involved. For some they may find that the new house is falling at a rate greater than their current home and thereby bridging the gap to the new home actually becomes easier. This is worth looking into and so you might find that moving onto a new, bigger home in a difficult climate is not the challenge you thought it would be.

Negative equity does become a problem, however, if you lose your job and can no long afford to keep up with your mortgage payments. In this scenario the British government is stepping in and helping people by offering to pay their interest payments for a period of 2 years. This solution does seem viable if the homeowner is able to resume paying their mortgage at the end of the 2 year period. This is the only government worldwide known to be offering this kind of scheme. The problem lies if the homeowner is not able to resume paying their full mortgage - in this instance the government's plan is only delaying the inevitable.

Seeing an opportunity in any market some property investors are operating a scheme whereby they will by your house for 90% of its market value and rent it back to you. Fundamentally this means you do not need to lose your home but it does leave you at the mercy of the private investor who could pull the plug on the rent deal whenever they choose so make sure you have the correct legal agreements and lease in place.

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