Initial concerns that the UK Building Society Nationwide’s 125% mortgage product represented a major backwards step to ‘the bad old days’ of mortgage lending have been dismissed as misinformed.
Revealing the product last week, the building society explained that it is available to existing borrowers who want to move house, but are in negative equity on their current home.
The offer is a 95% LTV mortgage with fixed rates of 6.73% for three years or 7.48% for five years (Whew!). When they need to move home, borrowers can then transfer part of their existing negative equity with them and borrow up to an additional 30% on increased rates.
The UK press was quick to draw comparisons with the ill fated bank, Northern Rock’s 125% ‘Together’ mortgage, when in actual fact, on closer inspection, the two products have little in common, except for the the maximum LTV.
