UK Lenders Are Back With 125% LTV Mortgage Loans

Coventry Building Society, the third largest British building societies, has recently announced launch of a new mortgage offer, which has caused controversial reaction among mortgage brokers. From now on, existing customers of Coventry Building Society who have a perfect credit history, but yet are trapped in negative equity, can enjoy 125% loan to value mortgage loans from the lender in case they wish to move homes. The new deal, which was supposedly launched to compete with a similar offer from Nationwide Building Society, another leading UK mortgage lender, allows existing borrows to “transfer” the existing loan to the new property of their choice without additional borrowing. According to the data released by the Council of Mortgage Lenders suggests that approximately 900,000 Brits are trapped in negative equity and are, thus, unable to move homes unless their repay their debt. Those, who have been hit the hardest by a 25% slump in UK house prices and now own properties that are worth less than the mortgage, are borrowers on high loan to value deals. In the opinion of Mr. Aaron Strutt, a mortgage broker, the move of the Coventry Building Society is an example of good practice that other British lenders should follow. He is determined that as long as both parties – the lender and the borrower – benefit financially from the new deal, more flexible lending criteria towards borrowers in negative equity is a bless. Coventry Building Society’s sales and marketing director, Mr. Franklin, highlighted that his company has always been known for responsible lending, fair treatment of customers, and support of borrowers facing financial difficulties. Let us remind that the similar offer available through the Nationwide Building Society gives borrowers a chance to borrow up to 95% LTV at 6.73% or 7.48% for 3 or 5 years accordingly, and then to borrow an additional 30% at 7.23% and higher.