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125% mortgages are back! Well, sort of...

publication date: Jul 9, 2009
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The Nationwide, the UK's biggest building society is offering a mortgage product to existing customers of 95% loan to value with additional borrowing of 25% available on tiered interest rates. Customers need a 5% deposit.

Nationwide says the product is "very niche" so in no way signals a return to the good old bad old days.

It works like this: existing borrowers would take out a loan for 95% of the value of their new house at a fixed rate of 6.73% for three years or 7.48% for five years.

They would also need a 5% deposit on the new house.

They would then be able to add on the negative equity from the house they were selling, up to another 25% of the value of the new house, at a higher fixed rate of 7.23% for three years or 7.98% for five years.

The Nationwide insists its customers would be tested rigorously to ensure they could make the repayments.

The FSA has been considering limiting mortgages to 100% loan to value.

Nationwide says the product is "very niche" so in no way signals a return to the good old bad old days.