125 mortgage
Getting more then expected is what every one want. 125 mortgage will provide you with this facility. In 125 mortgage you can get value upto 125 percent of the property value on which you are taking the loan. In mortgage loans are provided by calculating equity of your asset, loan amount can be up to 95 percent of that value. LTV(loan to value) ratio will help you this understand more. Suppose you have equity in your property $17350 and you are looking for a loan.
Now in such case you can get a maximum of $13900. in 125 mortgage this value increases to more then 100 percent value of your property. Suppose the first mortgage is given you at 95 percent and the personal loan that they generally provide in such a deal is 35 percent hence you are getting 125 percent amount as loan i.e. you are getting 25 percent more money then an normal case. In the beginning of this trend lenders were pushing buyers into 125 mortgage.
But now the scenario has changed, it is hard to find any such lenders. Those who were in the market have also stepped back. Reason for this all is very simple. One, number of default loans are increasing due to which lenders are unable to make their full profit. After occupying the property they are in loss of 25% percent hence in very case of default they are having only loss no gain. That is what opposite of what they have thought of before entering into this business. If you read about such plans that lenders has released even six months ago are also turning of such offer, due to the dip in real estate.
Consumers are also not having benefit from such deals now a days. If some one has taken 125 mortgage are making it worst for the lenders. Suppose you have taken a 125 loan six months ago on your house as collateral and now price of your house has marginally gone down. That means the equity in your house has gone down, in effect to it 125 loan has turned into 135 or 150 loan. Here lender is under big pressure because he is increasing his loss if you default loan.
In case exactly opposite to it you are in a loss and lender is in profit if prices of property are rising. Suppose you have taken a 125 loan and prices are up by 35 percent then equity in your house has increased, the loan has become a 95 percent loan but the amount you have to pay is 125 percent of your house value that means you have to pay more then the previous amount set for refinancing. In case of second mortgage both cases can be harmful for both lender and consumer. In second mortgage 125 loan if you default then the second lender is in loss because his loan was not secured. If prices rises LTV ratio will increase and that means you have to pay more in this case also. Due to above reasons the lenders are pulling back deals.
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