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Thursday, July 09, 2009

The Return of The 125% Mortgage

Hot on the heels of a warning from Barratt Developments and Redrow, that stability in the UK housing market were being undermined by banks' reluctance to provide mortgage finance to borrowers, comes a new product from Nationwide.

Nationwide are bringing back the 125% mortgage, for homeowners facing negative equity.

The product will only be available to existing customers wanting to move house, whose homes are now worth less than their mortgage.

Borrowers in negative equity can get a new mortgage worth 95% of the value of the new property. They have to fund the remaining 5% in the form of a deposit, but then they can also carry over negative equity in their original home. The negative equity carry over can be worth up to 25% of the total cost of the new property.

However, Nationwide caution:

"We're certainly not relaxing our lending criteria."

Others will now be forced to follow suit.

1 comment:

  1. So people who can't afford to move now get to move only if they can pay their solicitors fees, stamp duty, and deposit of 5%?

    Lets do a quick bit of math... if they can't afford to bring the amount they owe on their mortgage down ... they can't afford to!

    And anyone who does take this deal is a muggins! Look at credit cards etc. People who are already unable to pay the balances off and run up more balances on them even still... ae in worse trouble than before.

    Not to mention that we definately haven't hit the bottom of the slope yet for house prices.

    ReplyDelete