Q My partner and I are first-time buyers. In January we got into a bidding war and had an offer accepted on a house but were then gazumped and had to increase our already very high offer. The vendors asked for offers in excess of £300,000 and we ended up offering £317,500. We were due to complete just before the lockdown, and the buyer has been keen to go ahead as soon as possible as the property is vacant. However, we have said we would prefer to wait until restrictions are lifted as it would be logistically difficult to move at the moment. We are now considering backing out. We are worried because we have gone to the very top of our budget, and with only a 5% deposit we are stretching ourselves thin. We love the house so much but do not want to be in negative equity if house prices fall. We have already asked for one price reduction and the buyer agreed to reduce the purchase price by £4,500. We have our mortgage in place (2 years fixed) and we have already paid out for solicitors fees and surveys. We would appreciate any advice. BP A Assuming the reduced price you will eventually pay for the house is £313,000 (£317,000 minus £4,500) and assuming your deposit is 5% of that, the value of the house would have to fall by more than £15,650 for you to be in negative equity. But even if the value of the house did fall by that much, while you are living in the property, being in negative equity doesn’t really matter. It becomes an issue when you come to sell or remortgage because negative equity means that a property is worth less than the amount you owe on your mortgage. In your case, house prices would need to fall by more than the 5% fall predicted by the estate agents Savills for you to be in negative equity. And you might be relieved to hear that it expects prices to bounce back in 2021, as do several other estate agents. If they are correct, by the time your two-year fixed rate comes to an end and/or you come to sell, you are unlikely to be in negative equity so it’s probably safe to go ahead with the purchase. However, if you are not planning to be in the house long term, it might be best to back out. But if you did back out, you wouldn’t get back the fees you have already paid and, if you have already exchanged contracts, you would lose the money you paid to your solicitor when the exchange took place. And you wouldn’t get to live in a house you really like. Want expert help finding your new mortgage? Use our new online tool to search 1000s of deals from over 80 lenders with the Guardian Mortgage Service, powered by L&C.