Death Of 125% Mortgages
The 125% mortgage has finally been killed off. Birmingham Midshires was the last lender to offer such mortgages and it announced it would no longer offer such mortgages.
There has always been a lot of debate about such loans. They meant that people taking them on were already owing more money than their house was worth from the moment they moved in. Now with house prices stagnating, at best, there was a very real risk that people could end up owing much more than the house was worth with very large repayments to be found each month.
Encouraging people to borrow more than they need is a very dubious practice at best and in the present climate it would seem to be a good thing that these 125% mortgages will no longer be made available to tempt the careless into the black hole of debt.
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