Abbey offers 125% mortgage
The current mortgage market is seeing problems at present, after so many months of offering sub-prime mortgages, many lenders have had to revise their lending criteria for their mortgage products.
It was always in the pipeline for a 125% mortgage to be the next step, but after recent events it was thought not to be on the horizon anymore. Despite this Abbey have decided to push on as normal - if they are the only financial institute offering this type of product they will certainly be the market leaders.
The mortgage product on offer is a 100% mortgage with a further 25% secured loan in addition. Of course this is totally dependent on the applicants circumstances.
Abbey says; "We are currently piloting a 100 per cent LTV plus product in our branches and through key brokers... we thought it prudent to run this as a pilot scheme only."
So who will go with this type of product? It is likely to be targetted at and appeal most to first-time buyers who find it difficult getting on the property ladder with todays house prices.
A mortgage expert at Moneyfacts.co.uk wants to remind borrowers who are thinking about this type of mortgage to "remember they are starting their mortgage effectively in negative equity, requiring over 25% growth in the property market before they can see any equity in their property."
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