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125% mortgage owners face high repayments
20 February 2008
Homeowners who have 125 per cent mortgages could have to make much higher repayments after the withdrawal of the products by most of the lenders offering them.
Recently nationalised Northern Rock could be left as the only lender offering the 125 per cent home loans after four lenders decided to stop offering them and another announced that the product is under review.
The mortgages, which were popular with first-time-buyers offered up to 95 per cent of the home value with an additional 30 per cent loaned on an unsecured basis.
As the offers disappear, and the mortgages people had come to an end, they could find themselves in a difficult situation when it comes to securing another loan as having a large unsecured loan will make it harder to get a good deal and so could end up with significantly higher repayments.
Meanwhile, Abbey noted that while the market is uncertain, borrowers are turning to fixed deals.
Nici Audhlam-Gardiner, head of Abbey Mortgages, said: "In the current market, certainty seems to be what a lot of people want, so we're driving down the costs on our fixed rate deals. Our two year fixes will start from a great rate of 5.39 per cent and five year deals are also looking extremely competitive."
