Nationwide offers 125% mortgage

Thursday, 09 July 2009 12:00

Nationwide is offering a 125 per cent mortgage for customers who are trapped in negative equity.

The building society said the "limited offer" is available only to existing customers who want to move house but negative equity is preventing them from securing a mortgage.

Several banks offered mortgages at 100 per cent or more of the property value before the credit crunch as house prices were rising quickly.

But many of these loans are now in default and banks withdrew the products, instead insisting on significant deposits and a good credit history.

Nationwide said its own offer is very different from these loans, which have been criticised for immediately putting borrowers in negative equity.

"We will be making very certain people will be able to afford the loan," said a spokesperson for the bank.

The offer is not open to new customers, who can only borrow up to 85 per cent of the value of the home they want to buy.

"We are just letting them carry over the negative equity from their old property," the spokesperson added.

Louise Cuming, head of mortgage at moneysupermarket.com, said: "Three cheers for Nationwide: at a time when overly restrictive and cautious lending practices are holding the housing market back, Nationwide's flexible approach is to be welcomed.

"Nationwide's move may force others to follow suit and apply similar creative thinking to help un-clog the housing market."

If you are an existing Nationwide customer and want to move home, visit your local branch and talk to an adviser, the building society said.

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