Nationwide Stuns Industry with 125% Mortgage
Nationwide has revealed it will be offering their existing clients the opportunity to shift negative equity onto a new property mortgage effectively creating a 125% mortgage loan. At first glance, it's a bold move from the high street bank at a time when lending such a high percentage is surely a dead and buried notion.
However, there are a fair number of restrictions on the product which are more in line with the recent trend of conservative lending.
- Existing Nationwide clients only so the bank has a very clear view of their reliability as borrowers
- A 5% deposit is still required
- The negative equity from a borrowers previous home can be carried over as long as the amount does not make the total loan exceed 125 per cent of the of the value of the new property.
Some mortgage advisers and lenders are welcoming the product with open arms. Lee Jones of MoneyMarketing reports: "Speaking to advisers and lenders alike, this product has been warmly received - Brentchase Financial managing director Mike Fitzgerald told me this is exactly what he has been waiting to see: sensible innovation within the rules".
Whereas Myra Butterworth, Personal Finance Correspondent, published at the Telegraph, she feels the high rates associated with the offer will not help homeowners tackle the problem of paying off their debts.
Read more on Nationwide's 125% mortgage here:
David Prosser: Why this 125% mortgage is welcome - The Independent
Nationwide offers 125% mortgage - BBC News
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