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The Nationwide Reintroduces the 125% Mortgage and Remortgage.


Before the current credit crunch 125% mortgages, remortgages and secured loans were a very ommon and popular feature of the finance services industries.
There were secured loan lenders whose core business was the 125% loan. This meant that if a homeowner had a property worth two hundred thousand pounds and a mortgage balance of one hundred and ninety thousand pounds they could theoretically borrow up to sixty thousand pounds.
The Northern Rock Building Society had a similar plan for mortgages and remortgages whereby a homeowner could obtain a remortgage up to twenty five per cent more than the value of the property.
The collapse of the Northern Rock can partly be contributed to the 125% plan.The Northern Rock is of course now 100% state owned.
Everyone in the mortgage industry really thought that the 125% secured loan,remortgage and mortgage were in the past, but surprise, surprise it has returned already.
The Nationwide Building Society has been the first to announce itís return with two other major remortgage lenders expected to make a similar announcement in the near future.
The new 125% plan is not nearly as comprehensive as the previous plans.
To be eligible for the 125% mortgage you have to be an existing Nationwide customer. In addition to being an existing customer you must also be in a property which has suffered from negative equity.You are also required to have a minimum 5% deposit to put down on the new property.
If you meet all this criteria the Nationwide will grant you a mortgage of up to 30% more than the value of the property.
It is certainly a good way to help the many homeowners stuck in the negative equity trap who otherwise may have to wait years for their property to increase sufficiently in value to enable them to move house.
Negative equity is when the value of your home is lower than your mortgage balance.
The 125% plan is going to benefit many homeowners, but is it a wise move as along with such unwise lending practices as self certification of income etc. the 125% mortgage and remortgage lead partly to the present credit crunch with mountains of toxic debts.


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