» Read the complete article

It sounds ominous and frightening, but if you are in negative equity there is no need to panic – keeping a cool head will help you get back into positive equity in the near future.

According to research group GfK NOP, nearly four million homeowners are in, or close to, negative equity thanks to falling house prices over the last year.

The group surveyed 60,000 UK householders and the figures do seem depressing. Andy Thwaites, of GfK Financial, says: "The shift to negative equity has the potential to be a mammoth welfare disaster for the nation. The reality is that if there are further job cuts, the problem will become significantly worse."

More bad news, and more gloom from every corner of the UK. But this is not the time to worry, this is the time to be sensible, keep a level head and look to what you can do to keep yourself afloat during this tough time.

Negative equity means your mortgage debt is larger than the price of your home, so even if you sold it while it was in negative equity, you would still owe money. But that's only if you sell the property – if you keep paying your mortgage and keep trying to make the most of your money, there is nothing to fear from negative equity.

House prices may continue to fall, but every economist will tell you that house prices go up and house prices go down. So this time next year, your negative equity problems may have gone away completely.

If you are worried about negative equity, then talk to your mortgage broker. They will be able to lay out the facts for you are give you a realistic idea of your options. Fear will not help anyone through the credit crisis we face, only sound advice and ignorance towards the doom merchants will see us through.

SOURCE: Gfk NOP, 27/02/09

To Keep up with news and comments on the current adverse credit market please visit the Adverse Mortgage Blog.