Is 125% Mortgage an Endowment in Reverse?

MarkyMarkD

I'm amazed that it does have good arrears performance, given that much of it is for consolidation, but the numbers seem to stack up for NR or they'd have pulled it ages ago.

The above-average rates would compensate for higher losses in any case. It's not a product I'd like to be doing lots of when there is a house-price crash or a general recession.

Ian_W

dwight-van-man posted: On a purchase of 120k, you could borrow 144k which, assuming 5% annual house price growth would allow you to break even in a little under four years (less on a c&i mortgage)

Break even, yes - break free to remortgage or move, probably more realistically 5yrs plus. By which time you'd have a little over £9K equity in the property just about allowing a 95% remortgage if my calculator's working correctly - the majority of which, am I right in thinking, will have HLCs? In fact it's 6yrs based on 5% HPI before a 90% remortgage is available.

But we all know house prices only go up by double digits and Gordon's told us boom 'n' bust is over so we'll never have another recession. Still, as Mark says, wouldn't like to be on one of these or as lender doing many if old Gordo's wrong.

TangentMan

Already in this thread assumptions regarding house price movement are appearing - this is the part that i bound to lead to another endowment like issue.

jurassic86

Hello People.

I've been reading comments on this forum for months now, and finally decided to register so I can post my views up on this controversial 100%-125% mortgage.

I am like alot of people out thier, opting to sign on the dotted line for the 100% mortgage. The mortgage in particular is with Lloyds TSB and its 6.34% Fixed for 2 Years, reverting back to the all famous 6.5% for the remainder of the term.

I am looking to buy a property for around 110-120k. Lloyds have quoted me £598.69 to buy a property of £120,000 with a £6,000 deposit, resulting in my mortgage being a 95% mortgage (borrowing £114,000). If i was to borrow the full £120,000 then I am going to have to pay £711.68, an extra £110 (ruffly).

The way I, and probally many other first time buyers are seeing it is.. 24 payments (paying an extra £110) is £2,640. This is what we are paying extra to borrow 100%.

But i'd rather pay £2,640 than find a £6,000 deposit? Either way I look at it, if my home goes down in value, then im going to loose money, weather its a deposit or not? So i'd rather spend the £6,000 that i've saved furnishing the place, meaning that I am less likely going to want much more doing to my house over 2 years.

Very negative way of looking at it, but this is the way I, and probally 100s of people see it,and why its such an attractive option.