The UK’s biggest building society Nationwide have confirmed that have been offering existing customers who are in negative equity but want to move house, the opportunity to take out loans of up to 125% of the value of the new home.
Nationwide say that they have been offering the 125% mortgage deal since early June as a ‘very niche’ product available only to existing lenders. In a report in the Guardian a Nationwide spokesperson said;
“It is a very niche offer. All we are doing is allowing them to carry across the negative equity they already have. It’s not about additional borrowing or additional risk. The maximum borrowing we would consider is 125 per cent overall, but that doesn’t mean someone can automatically get that. We would go through our normal procedures, looking at income, outgoings and so on.”
Critics are concerned that Nationwide are going against everything that has been learnt from the credit crunch, but at least one mortgage broker has described it as ‘a really consumer-friendly move’ and added that at least two other major players are looking at introducing a similar product.
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