Wednesday, Feb 20, 2008
Say goodbye to 100%+ LTV
The Times: Borrowers on 125% mortgage deals face big jump in repayments
Thousands of borrowers on 125% mortgage deals will be forced to pay hundreds of pounds more in monthly repayment bills after most of the lenders offering these loans withdrew from the market yesterday.
The credit crunch and stalling house prices have forced four leading lenders (A&L, Abbey, Coventry BS and Godiva) to stop offering 125% mortgage deals. Another lender said that its deals were under review, which could leave Northern Rock as the only lender still offering this type of loan.
The mortgages typically offered 95% of the value of a home as a traditional mortgage, plus another 30% as an unsecured personal loan. There are fears that some home-owners will be unable to find a similar offering when their current deal ends.
Posted by little professor @ 12:17 AM (559 views) Add Comment
6 Comments
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1. Hyrax said...
Seems the lenders have been selling Camels preloaded with the last straw!
So this is not sub-prime, this in not even MEWIng, this anticipated profit extraction (APE) taken on house purchase.
Looks like there will soon be lots of cheap new cars being sold to bring borrowers back onto only 100% mortgages!
But of course its not sub-prime as we know it in America!
Naughty Northern Rock (and others)...
2. This comment has been removed as it was found to be in breach of our Blog Policies.
3. renting2 said...
The 125% deals are usually made up of a 95% mortgage and a 30% unsecured loan, both parts at the same interest rate. However, if you are forced to remortgage with no similar deal available you end up with a 95% mortgage (at best) and a standing unsecured loan with the original lender - Only if your income allows it. The sting in the tail is that the unsecured loan interest rate is hiked up to about double. This means very, very few people in this position will find it sustainable.
I would say there are going to be a lot of FTB from the last couple of years forced to sell soon.
4. alan said...
B&B website seems to be offering 110%.
I guess it depends on the ability of the customer to pay (like any other loan).
5. sacred contracts said...
I'm amazed they kept these going this long... its a huge amount of instant negative equity at any time...
6. 5lab said...
it depends on how well the person can budget to survive. As a student I used to live off 4k a year, and still live comfortably. Yet with even a 7x loan on 40k (so 280k), i'd still be left with ~£10k to play with after the payments came out. I'm not personally in this senario, but wage:to:loan seems like a silly measure, surely it should be a multiple of spare cash after bills?