Are You in Negative Equity? You’re Not Alone
I spoke to a few people this week who are currently in this situation — where the market value of their home has dropped below the amount they owe on their mortgage.
What Is Negative Equity?
Negative equity happens when you owe the bank more than your house is currently worth. It usually becomes a concern when property values fall after a purchase made during a market high.
For example, if you bought a home for $800,000 with a 10% deposit, and now that home is worth only $700,000, but you still owe $720,000 on your mortgage, you’re in negative equity.
Why This Matters in New Zealand Right Now
This is a real issue for some New Zealand homeowners, especially those who bought in 2021–2022. New builds from that time have been hit particularly hard by recent price corrections and rising interest rates.
Is It a Disaster?
Not necessarily. As long as you can keep up with your mortgage repayments, your bank likely won’t take any action. The real challenge arises if you need to sell or refinance while in negative equity.
How to Manage Negative Equity
There are practical ways to handle this situation:
- Keep making repayments and wait for the market to recover — although this may take several years.
- Increase your home’s value through smart renovations or upgrades that boost market appeal.
- Talk to your mortgage adviser or bank early if you’re feeling the pressure — they may help restructure your loan or offer repayment flexibility.
Thinking of Buying Property in 2025?
If you’re looking to buy a first home or investment property this year, having someone experienced on your side is invaluable. The right advice can help you avoid these traps and build equity confidently and strategically.
Let’s Talk 1:1
If this sounds like something you want to explore with my coaching, book a call with me. You’re guaranteed to learn something from it.
