Can You Remortgage in Negative Equity?
Author: Jack Freestone
Finance Writer at Boon Brokers
Reviewed by: Gerard Boon
Managing Director at Boon Brokers
Most high street lenders will not accept remortgage applications from borrowers who are in negative equity. The most common alternative is to complete a product transfer and stay with your current lender on a new deal.
If you’re unsure what negative equity is, understanding how and why it can affect your borrowing options can help you make more informed mortgage decisions. While it’s true that remortgaging in negative equity can be far more difficult than a standard remortgage, that doesn’t mean you are out of options.
Depending on your circumstances, you may be able to reduce your loan-to-value (LTV), switch to a new deal with your existing lender through a product transfer, or take steps to improve your equity position before applying for a new mortgage.
In this article, we cover everything you need to know about remortgaging in negative equity, the alternatives that may be available, and what you can do if your current mortgage deal is coming to an end. Let’s begin.
Why Is It Difficult to Remortgage in Negative Equity?
Most lenders won’t approve a negative equity remortgage because the loan exceeds a 100% loan-to-value (LTV). This increases the lender’s financial risk, as repossessing and selling the property may not recover the full mortgage balance.
Firstly, it’s important to understand that when you apply to switch to a new lender, your application is assessed as a brand-new mortgage. As a result, one of the first things the lender considers is the loan-to-value (LTV). This compares your outstanding mortgage balance against your property’s current market value.
If you are currently in negative equity, your mortgage will be worth more than the property securing it. In other words, the LTV exceeds 100%. This essentially means that the lender is being asked to lend more than the property is currently worth. For example:
- Your outstanding mortgage balance is £220,000.
- Your property is currently worth £200,000.
- Your loan-to-value (LTV) is currently 110%, as you’re borrowing 110% of the property’s current value.
- If the lender had to repossess and sell the property for £200,000, they could be left with a £20,000 shortfall before fees and selling costs.
For lenders, this creates a significant financial risk and could leave them to absorb the shortfall. As a result, most lenders will not approve remortgage applications above 100% LTV.
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What Are the Alternatives to Remortgaging in Negative Equity?
The main alternatives to remortgaging in negative equity include a product transfer with your existing lender, reducing your loan-to-value (LTV), or waiting until your equity position improves.
If you’re unable to remortgage with a new lender and your fixed-rate deal ends, then you will automatically be moved onto your lender’s Standard Variable Rate (SVR). Because SVRs are often higher than fixed-rate deals, this can result in significantly higher monthly repayments.
However, the good news is that moving onto your lender’s SVR isn’t your only option.
Depending on your circumstances, there are several alternatives that could help you secure a more suitable mortgage deal or improve your chances of remortgaging in the future.
The alternatives fall into 4 categories: stay with your existing lender, improve your equity position, increase the property value, or delay remortgaging until your LTV has reduced. The table below outlines each of these options and how they work in practice:
| Option | How It Works |
| Product transfer | Switch to a new mortgage deal with your existing lender without the need to take out a new mortgage. |
| Reduce your mortgage balance | Make overpayments or use savings to lower your outstanding mortgage, improving your loan-to-value (LTV) and increasing your chances of remortgaging with a new lender. |
| Increase Property’s Value | Certain home improvements can increase your property’s market value, helping to improve your loan-to-value (LTV) putting you in a stronger position to remortgage. |
| Wait until your equity improves | Continue making mortgage repayments while allowing time for your property’s value to recover, improving your equity position over time until you qualify for a remortgage. |
For many homeowners, a product transfer is the most common and realistic option. Unlike a remortgage, you are not moving to a new lender. Because your current lender is already exposed to the risks of negative equity, offering a product transfer doesn’t increase that risk. Instead, it simply allows you to move to a new mortgage deal without increasing the amount you’ve borrowed.
For those who have savings available or can afford to make overpayments, reducing your outstanding mortgage, waiting for your property’s value to recover, or investing in home improvements can also improve your equity position and increase your chances of being accepted for a remortgage in the future.
With that said, there’s no guarantee that waiting will improve your equity position. Property prices can be unpredictable, and if values fall further, you could end up with less equity than you may have today.
The right option will always depend on your personal financial circumstances and how soon you need a new mortgage deal. As such it is always best practice to consult a mortgage broker or expert to receive tailored advice on the options that are available to you.
Get free mortgage advice on product transfers, remortgaging and improving your equity position.
What Should I Do If My Fixed-Rate Deal Is Ending?
Before your fixed-rate deal ends, it is often best to arrange a new mortgage product to avoid moving onto your lender’s Standard Variable Rate (SVR). If you are currently in negative equity, this will usually involve exploring alternatives such as a product transfer with your existing lender.
When your fixed-rate mortgage comes to an end, you will ordinarily be moved onto your lender’s SVR. The interest rates of SVRs are set by the lender and can be much higher than fixed-rate or tracker mortgages, potentially resulting in significantly higher monthly repayments.
An important consideration to take into account is that your existing lender already has a legal charge over your property, and so it’s generally in their best interest to help you continue making your mortgage repayments. As a result, many lenders will offer product transfers that allow eligible borrowers to switch to a new fixed-rate or tracker mortgage.
This can help borrowers avoid the higher interest rates associated with their lender’s SVR and keep their monthly repayments more manageable while they continue building equity in their property.
However, product transfers are not always guaranteed. Some lenders do not offer products above 95% loan-to-value (LTV). If they don’t have a product available for your current LTV, you may have no choice but to remain on their SVR or make a payment to reduce your LTV to a level that qualifies for a remortgage. It ultimately depends on what products the lender offers.
Can a Mortgage Broker Help?
Yes. A qualified mortgage broker will be able to assess your circumstances, recommend the most suitable mortgage option and arrange an alternative solution if you’re unable to remortgage with a new lender.
If you’re in negative equity, rather than waiting until the last minute, speaking to a mortgage broker early can help you understand all of your options before your current mortgage deal expires.
In many cases, this will involve arranging a product transfer with your existing lender while you continue building equity in your property. If a product transfer isn’t available, a broker will also be able to advise on the next best steps you can take to improve your loan-to-value (LTV), creating a plan on how you can reach a position where remortgaging with a new lender becomes possible.
At Boon Brokers, we provide fee-free mortgage advice to help you understand all of the options available to you. Whether that means arranging a product transfer with your existing lender or creating a longer-term plan to improve your equity position, our experienced advisers will support you every step of the way.
As a general rule, you should aim to speak with a mortgage broker around six months before your current mortgage deal ends. This provides enough time to review the products available, create a plan to improve your equity position if necessary and avoid making rushed decisions once your fixed-rate deal expires.
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Frequently Asked Questions
Can I Switch Mortgage Lenders If I Am in Negative Equity?
Usually not. If your outstanding mortgage is greater than your property’s current value, you’re in negative equity as your loan-to-value (LTV) exceeds 100%. Most lenders therefore won’t approve a new mortgage because the property no longer provides enough security for the loan. If you’re unable to switch to a new lender, a product transfer with your existing lender may be the most suitable alternative until you’ve built more equity.
How Much Negative Equity Can a Lender Accept?
There isn’t a fixed amount of negative equity that lenders will accept. Instead, remortgaging and equity are assessed using your loan-to-value (LTV). Most mainstream lenders won’t approve new mortgage applications where the LTV exceeds 100%, although some existing lenders may still offer product transfers depending on their lending criteria.
Should I Remortgage or Wait Until I Have Positive Equity?
It depends on your circumstances. If you need to remortgage but are in negative equity, a product transfer may be the most practical short-term solution while you improve your loan-to-value (LTV). Talking to a mortgage broker can help you understand how to remortgage when in negative equity, allowing you to decide whether it’s best to act now or wait until you’re in a stronger position to switch lenders.
Jack Freestone
I’m an established content writer at Boon Brokers, where I write and publish financial and mortgage-focused content across the UK property and lending marketplace. My work covers topics including first-time buyers, remortgaging, equity release, and wider market developments affecting borrowers. I hold a Master’s degree in English Literature from the University of Bedfordshire, graduating with distinction. Since then, I’ve worked across freelance, agency, and in-house roles, building experience writing across a range of subjects, with a focus on topics that directly affect everyday consumers. Today, my writing focuses on making complex financial topics clearer, more practical, and easier for everyday readers to understand.
