RSS Feeds125 per cent mortgages become clouded
04/12/2007
According to recent UK mortgage industry news there are talks that loan values in excess of 100 per cent may not be all that they are made out. Due to market pressures on UK credit levels many Banks and lending institutions have tightened their policies and lending criteria. Borrowers who are looking to take out mortgages such as 125% loan to value mortgage products could find it difficult to actually get that level of borrowing.
Many people are now looking to borrow in excess of the market value of their property to allow enough funds for carrying out immediate remedial work, legal costs and the general cost of moving into a new home.
In addition, with forecast of a declining property market could leave people in difficult situations, borrowing more than the property value could lead to homeowners paying mortgage payments and still remaining in a period where they are in negative equity. Borrowers are urged to think twice about these sorts of products and consider the fluctuations and impact the market could have on them.
A spokesperson from Moneyfacts.co.uk commented lenders have implemented such tight restraints on these mortgages that only in certain circumstances will a borrower receive the full 125% loan.
Many high street lenders are now only limiting the amount of additional borrowing that is beyond the standard secured loan component. This additional loan capping will ultimately mean what value of property people will be able to purchase if they are looking to borrow additional funds.