An Introduction To 125% Mortgages

125 Percent Mortgages

A 125 percent mortgage is a mortgage product that allows the home buyer to borrow 125 percent of the value of a property...

Get a Free Quote 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.


What is a 125 Percent Mortgage

The last mainstream UK mortgage provider offering a 100% mortgage withdrew their mortgage product in February 2008. What follows describes the situation before the problems associated with the credit crunch erupted.

A 125 percent mortgage is a mortgage product that allows the home buyer to borrow 125 percent of the value of a property.

A 125 percent mortgage is made up of two components:
Bullet Point 95 percent mortgage, linked to
Bullet Point an unsecured loan of up to 30 percent of the property's value.

125 Percent Mortgages: Background Information
Northern Rock was the first UK financial institution to introduce a 125 percent mortgage and their ‘Together mortgage’ is still the market leader. A few other lenders, for example, the Coventry Building Society and Scottish Widows, have introduced similar products, but they do not provide loans based on such high income multiples as Northern Rock's offering.

Key Characteristics of a 125 Percent Mortgage:
Bullet Point flexibility;
Bullet Point fixed or variable rate option;
Bullet Point available to first time buyers, people moving house and re-mortgagers;
Bullet Point same interest rate for both the secured and unsecured loan elements;
Bullet Point unsecured loan element can be used for any legal purpose.

Interest Rates on 125 Percent Mortgages
The interest rate charged on a 125 mortgage is slightly higher than for conventional mortgages (but lower than for most standalone unsecured loans).

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Typical Interest Payments

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2.89%

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2.89%

Discounted Rate

2.99%

Buy To Let

2.99%

Commercial

3%

 

 

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