Navigate money 48
Person 1: I am concerned. My mortgage is $500,000 on a property I bought recently for $600,000. Today, the market value of the property is $490,000.
Person 2: Oh! You are in negative equity of $10,000.
Person 1: What’s that negative equity?
Person 2: Negative equity happens when the outstanding mortgage on the property becomes more than the current value of the property.
Person 1: Not good news!
Person 2: Yes. This usually happens when you buy a property just before a correction in housing market.