Negative equity, put simply, is when your home is worth less than the mortgage you owe on it. This is the situation facing many homeowners who took out mortgages during a more prosperous time, when house prices were higher.

But while it's bad news for anyone wishing to sell their home, it's a breath of fresh air for someone looking to buy a new property. Now is a good time to buy a property if you can, as economists are predicting that once the market hits rock bottom in 2010, prices will slowly begin to rise again. This means that the house you purchase for £120k now could be worth £150k or more in just a few years time.

The only major spanner in the works for buyers at the moment is the mortgage lender's refusal to bring their mortgage rates to a more affordable level. Although the Bank of England is slowly lowering its base rate, some lenders refuse to pass this onto their customers. This could potentially lead to a rise in repossessions as homeowners find they cannot afford their high mortgage rates.

One way to avoid this is to go for a tracker mortgage; as the name suggests, it 'tracks' the BoE base rate and adjusts the repayments accordingly – when the base rate falls, your repayment amount falls. Of course, this does mean that if the base rate rises, your repayments will too, but at a steady level rather than a dramatic increase. A fixed rate mortgage will give you guaranteed repayment amounts for a certain length of time, but these often come with a higher interest rate.

If you have savings, offset mortgages can be another option. This type of mortgage counts your savings towards the overall cost of the loan, and reduces your repayments accordingly. Even in the current climate there are mortgages to suit everyone.