125% Mortgage
In the U.K., Nationwide Building Society now offers a mortgage allowing borrowers to take loans worth 125% of the value of the home they are buying:
It will only be available to existing customers in negative equity who want to move house.
Negative equity means that the value of someone’s home is worth [sic] less than the amount they owe on their mortgage.
Nationwide only offers new customers mortgages worth 85% of the value of the home they want to buy.
Under Nationwide’s new product, borrowers would take out a loan for 95% of the value of their new house at a fixed rate of 6.73% for three years or 7.48% for five years.
They would then be able to add on the negative equity from their old home, up to another 30% of the value of the new property, at a higher fixed rate of 7.23% for three years or 7.98% for five years.
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