125% mortgages - not quite what they seem - Loans - News - Moneyfacts

News

Moneyfacts.co.uk News brings you the latest financial & economic news & reviews of the best products in the UK by our team of money experts.

125% mortgages - not quite what they seem

125% mortgages - not quite what they seem

Category: Loans

Updated: 31/10/2008
First Published: 06/12/2007

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Despite the continuing tightening of lending criteria in the mortgage market, especially on riskier loans, five mortgage lenders are still offering the much talked about 125% mortgages.

However 125% loan to values may not be quite what they seem. Mortgage lenders have put such tight restrictions on them that only in very specific circumstances can a mortgage borrower will get the full 125% loan.

For example Abbey,Alliance and Leicester and Coventry will restrict the extra loan, secured or unsecured to a maximum of £25K. Effectively this means that the property can only be worth a maximum of £100K to achieve a 125% loan.

This week Northern Rock placed further restrictions to some of its Together range mortgage products. On the lower rate mortgage deals, the unsecured loan is limited to a maximum of 30% or £10K. In these circumstances, the property would have to be worth a maximum of £33K in order for the borrower to get the full 125%. A 30% or £30K loan is still available but at a 0.20% higher rate.

At a time when the housing market is showing signs of a slowdown, it is especially important that borrowers take full consideration of what borrowing more than the current value of their property could mean for them in the future.

Mortgage best buys - 100% mortgages

Mortgage best buys - First time buyers

Mortgage best buys - Fixed rate mortgages

Mortgage best buys - Variable rate mortgages

Mortgage best buys - Discounted variable rate mortgages

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

Related Articles

Blue Monday hits nation’s finances

Today has been dubbed Blue Monday – the most depressing day of the year – and considering how many people could be battling with their finances this month, it’s little wonder.

Calls to make the loans market clearer

At first glance the personal loans market may seem simple enough, but get into the nitty gritty and it can be anything but. As a result, some are calling for action to make the market clearer and fairer for all.

Get the cheapest ever personal loan!

Have you woken up with a financial hangover after the festivities? Perhaps you’ve got big plans for the year ahead, or maybe you need a new car? Well, whatever your reasons for needing a loan, you can now snap one up for the cheapest ever rate!
 
Close