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125% Loan |
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125% Loan A mortgage loan for 125% of property value. Since such loans are only partly secured, they have many of the characteristics of unsecured loans, including relatively high interest rates. Rates are largely determined by the borrower's credit score, however, and can be quite reasonable when the score is high. A drawback is that borrowers have difficulty refinancing 125% loans and can't sell their house without defaulting unless they can come up with the additional cash required to pay off the 125% loan. How to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit webmaster's page for free fun content. |
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| The more risky mortgages, such as the 125% loans issued under the ill-fated Together deal, have been pushed into the "bad bank" owned by the taxpayer. This route has effectively been shut as a combination of falling house prices, the concentration of toxic 125% loans and the inevitable negative equity makes it difficult for borrowers to move banks, even if they wanted to. We have never got involved in the 125% loans that were available in the past. |
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