Nationwide building society have announced a 125% LTV mortgage in a shock move considering the current financial situation. However, the pre-requisites of the mortgage deal are quite limiting to the large majority of people searching for a mortgage and the building society have been keen to down play the ‘new’ mortgage product.<\/p>\n
The mortgage is designed to help those currently in negative equity move and transfer their exisiting mortgage to a new property. So the crux is that you must have a mortgage with Nationwide for this to be an option.<\/p>\n
However, for exisiting Nationwide customers who have felt ‘stuck’ due to their current mortgage situation it may offer a lifeline and possibility for them to revisit moving.<\/p>\n
A Nationwide spokeswoman said: “It is a very niche offer. All we are doing is allowing them to carry across the negative equity they already have \u2013 it’s not about additional borrowing or additional risk. The maximum borrowing we would consider is 125% overall, but that doesn’t mean someone can automatically get that.”<\/p>\n
Those who meet the requirements will be able to take out a fixed-rate mortgage where Nationwide will lend 95% of the new property’s purchase price, plus an amount equal to the negative equity on their existing property. The mortgae applicant will need to pay a higher interest rate on the amount of the negative equity they will be borrowing, and as is normal the loan is secured on their home.<\/p>\n
For e.g. – someone taking out a 3 year fixed-rate would pay 6.73% up to 95%, and then 7.23% on the remainder of the amount borrowed, up to a maximum of 125%.<\/p>\n
Since Nationwide’s announcement there does seem as if some of the other lenders may follow Nationwide’s lead and offer similar products. The 125 % mortgage does seem to have been welcomed as ‘customer friendly’ as it does allow those in this position to consider moving again; who would of previously found it almost impossible due to not being able to find a suitable mortgage which would cover the amount owed against their home.<\/p>\n","protected":false},"excerpt":{"rendered":"
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