125% No Longer Provided!
125% Mortgages are no longer available. Available options similar to this type of discontinued product are ‘Minimum 10% Deposit’ and ‘Shared Equity Mortgages’.
If you would like to inquire about either a minimum 10% or a shared equity mortgage click on the FREE QUOTE button.
Beware Over-commitment Of A 125 Percent Mortgage
Perhaps, understandably, cautious first time buyers may be reluctant to commit themselves to 125 percent mortgages, particularly if their incomes are low or they feel that their employment situation is precarious. So, what are the alternatives
Mortgage options include:
Most financial institutions now offer interest only mortgages. The major advantage of an interest-only mortgage is that the monthly repayments are much lower than for a repayment mortgage of the same value. The disadvantage of an interest-only mortgage is that, for the life of the mortgage, none of the capital is being paid off. This means that at some point the property will have to be sold in order to repay the loan to the mortgage provider. Click here to obtain an online interest only mortgage quote today.
If property prices rise during the term of the mortgage then the borrower might make a sufficiently large capital gain to be able to put down a decent deposit on their next property. Perhaps, also, their income will have risen sufficiently for them to be able to afford a repayment mortgage next time round. Some financial institutions offer mortgages that are interest-only for a fixed period (for example, three years) and which then become repayment mortgages for the remainder of their term. This type of mortgage is probably a good option if your income is likely to rise steadily, over time.
The concept of the inter-generational mortgage originated in Japan as a result of property prices, particularly in Tokyo, being so high. The inter-generational mortgage is a long-term interest-only mortgage where the borrower makes regular payments during their lifetime. When the borrower passes away, the property is bequeathed to someone (usually their child) who then has the option either of continuing to make the mortgage payments or to pay off the mortgage loan.
The Kent Reliance Building Society is now offering inter-generational mortgages in the UK, so it will be interesting to see if other mortgage providers follow their lead.
Key Worker Mortgage
Some public sector employees in London, East Anglia or South East England are eligible for key worker mortgages. A key worker mortgage acts as a top-up (of up to 25 percent of a property’s value) to a conventional mortgage and can be used for housing association shared ownership schemes, as well as more traditional property purchases.
Police officers, fire fighters, prison officers, probation officers, teachers and NHS staff can apply, but the number of key worker mortgages available at any particular time is limited.