Nationwide offer 125% mortgage
Britain’s biggest building society Nationwide launched a 125% mortgage for home owners trapped in negative equity who were keen to move house, the Telegraph reports.
It is being offered only to the society’s existing mortgage customers whose house value is less than the mortgage on the property, but who are looking to move home and borrow more.
The product’s availability comes despite the much tighter lending criteria introduced by virtually all lenders in the wake of the credit crunch.
Nationwide said that their existing customers in negative equity would be offered its 95% loan-to-value deals, with rates of 6.73% fixed for three years or 7.48% fixed for five years.
While it’s a good deal for home owners who want to move house, apparently Nationwide haven’t learnt anything. 125% mortgage is a certain death trap for a bank or a building society and will eventually create more loss than the profits from those incredibly high interest rates.
When are you going to learn? When, when???
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The borrower still has to stump up a 5% deposit. I reckon this deal will only be taken up by a very small handful of existing customers. The up to 125% portion rate is nearly 8% so I would have thought anyone with any sense would hold tight where they are rather than take on this, unless they desperately have to move.
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