125% Mortgage Quotes

125% Mortgages

The 125% mortgage is usually made up of two elements: a 95% mortgage take-up linked to an unsecured loan of up to 30% of the value of the property, with both elements being charged at the same interest rate. It may be especially attractive to those who find difficulty in saving for a deposit at times when housing prices are rising rapidly. This type of loan, as well as being available for first-time buyers, can also be applied for by those simply wishing to move home or for re-mortgage applicants as a means of releasing the equity on their home.

It can also be a practical way of enabling parents to raise sufficient funds in order for their children to buy their own home. Generally the mortgage may be offered at either fixed or variable rate terms. For the first time buyer with limited finances, it could be the means of covering the additional costs of the solicitor, stamp duty and also allow them to adequately furnish the house without the need of taking out a higher-rate loan or adding to credit card bills.

And, because the additional funds may be used for “any legal purpose”, it may be applied towards the consolidation of any other outstanding loans, including those contracted with credit card companies, which will invariably have been charged at a much higher rate. Again, because of the obvious inherent risks to the lenders, the interest rates will usually be higher than for a more standard type of mortgage.

There are, though, deals in existence which allow the flexibility of overpayment without penalty and some for which there are no higher lending charges to pay. As might be expected with this kind of mortgage offer, stringent checks as to the applicant’s financial ability to repay the mortgage are likely to be made prior to releasing any funds.

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