Borrowers in negative equity being offered 120% mortgages

Posted under News by Jermaine

Halifax, one of the biggest mortgage lenders in the UK has come to the rescue of existing customers with offer of 120% loans at the end of their current deal.

HBOS, member of the Lloyds Banking Group is planning to offer new loans to customers who are in negative equity and whose current deals such as fixed rate are about to expire.

Normally in case of borrowers in negative equity, rates are reverted to standard variable rate (SVR) and it becomes difficult for them to re-mortgage if the amount of new loan exceeds property’s current value on account of house price decline.

Lenders are approving loans up to 95% of property value, but the customers bargaining for most competitive deals have to borrow not more than 60 to 75%.

However Halifax and bank of Scotland are offering same rates of 95% loans to re-mortgage customers who require 120% of the property value.

HBOS are extending negative equity loans this month up to 120% LTV, but will not be publicizing this anywhere. Brokers believe HBOS is possibly the only major lender helping the customers in negative equity.

Melanie Bien of Savills Private Finance remarked that HBOS was doing decent thing by providing loans at fixed rate to those in negative equity, which is normally given only to customers borrowing at 95% LTV. She urged other lenders to follow HBOS’s good example.

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