Calculate if your property is in negative equity, meaning you owe more than it's worth.
Result
Understanding Negative Equity
Negative equity, often referred to as being "underwater" or "upside down" on a mortgage, occurs when the total amount you owe on your property (including your mortgage and any other secured loans) is greater than the current market value of that property.
Why is Negative Equity a Concern?
Selling: If you need to sell your property while in negative equity, you'll likely need to cover the difference between the sale price and the total amount owed. This can be a significant financial burden.
Refinancing: It can be difficult or impossible to refinance your mortgage if you have negative equity, as lenders see it as a higher risk.
Financial Distress: In severe cases, it can tie you to a property you can no longer afford or that doesn't meet your needs, impacting your financial flexibility.
How the Negative Equity Calculator Works:
This calculator simplifies the process of identifying negative equity. It takes into account:
Current Market Value of Property: This is the estimated price your property would sell for in the current real estate market.
Total Outstanding Mortgage Balance: This is the principal amount remaining on your primary mortgage.
Other Secured Loans on Property: This includes any additional loans (like home equity loans or lines of credit) that are secured by your property.
The calculator determines your total debt secured by the property by summing the outstanding mortgage balance and any other secured loans. It then compares this total debt to the current market value.
The Formula:
Total Debt = Outstanding Mortgage Balance + Other Secured Loans on Property
Equity = Current Market Value of Property - Total Debt
If Equity is negative, you are in negative equity.
If Equity is positive, you have positive equity.
Example Scenario:
Let's say:
Current Market Value = $300,000
Outstanding Mortgage = $280,000
Other Secured Loans = $25,000
Calculation:
Total Debt = $280,000 + $25,000 = $305,000
Equity = $300,000 – $305,000 = -$5,000
In this example, the property has negative equity of $5,000. This means if you were to sell the property for its current market value, you would still owe $5,000 after paying off all secured debts.
Note: This calculator provides an estimate. Actual selling costs (real estate agent commissions, closing costs, etc.) are not included and can further impact the net proceeds from a sale.
function calculateNegativeEquity() {
var marketValue = parseFloat(document.getElementById("currentMarketValue").value);
var mortgageBalance = parseFloat(document.getElementById("outstandingMortgage").value);
var otherLoans = parseFloat(document.getElementById("otherSecuredLoans").value);
var equityStatusElement = document.getElementById("equityStatus");
var equityAmountElement = document.getElementById("equityAmount");
// Clear previous results and styles
equityStatusElement.textContent = "";
equityAmountElement.textContent = "";
equityAmountElement.className = ""; // Reset classes
// Input validation
if (isNaN(marketValue) || marketValue <= 0) {
equityStatusElement.textContent = "Please enter a valid current market value.";
return;
}
if (isNaN(mortgageBalance) || mortgageBalance < 0) {
equityStatusElement.textContent = "Please enter a valid outstanding mortgage balance.";
return;
}
if (isNaN(otherLoans) || otherLoans < 0) {
equityStatusElement.textContent = "Please enter a valid amount for other secured loans.";
return;
}
var totalDebt = mortgageBalance + otherLoans;
var equity = marketValue – totalDebt;
var formattedEquity = Math.abs(equity).toLocaleString(undefined, { minimumFractionDigits: 2, maximumFractionDigits: 2 });
if (equity < 0) {
equityStatusElement.textContent = "You are in Negative Equity.";
equityAmountElement.textContent = "Shortfall: -$" + formattedEquity;
equityAmountElement.className = "negative";
} else if (equity === 0) {
equityStatusElement.textContent = "You have zero equity.";
equityAmountElement.textContent = "Your total debt exactly matches your property value.";
equityAmountElement.className = "";
} else {
equityStatusElement.textContent = "You have Positive Equity.";
equityAmountElement.textContent = "Surplus: $" + formattedEquity;
equityAmountElement.className = "positive";
}
}