125% Mortgage
2 years ago
A new 125% mortgage from Nationwide has sparked fears of a return to the reckless lending of the housing boom.
The loans are available to existing borrowers who want to move house,but who are in negative equity on their current home.
Under the terms of the deal ,customers will be allowed to borrow upto 95% of the value of their home ,while putting down a 5% deposit.They will then be allowed to add on another 30 % of the value of their new property in negative equity from their old home.
Nationwide today argued that the loan was only available to people in a " Unique situation" ,who find themselves in negative equity but are being forced to move house.
The Loan has however raised concerns that the practice could expose the lender to even greater losses if house prices continue to fall..
It could also encourage a return to loans of more than 100% .At least two other major lenders are believed to looking at introducing similar deals for their customers