Negative equity scheme

Nic Cicutti
Friday 05 August 1994 18:02 EDT
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NATIONWIDE Building Society has launched a scheme for its mortgage borrowers that aims to help overcome negative equity problems if they want to move house, writes Nic Cicutti.

Borrowers will be eligible for a further loan to cover any shortfall between the value of their property and its sale price. Those needing a larger loan because of increased family size or job relocation will also be considered.

Maximum total borrowing is 125 per cent of the current value of the property, with an upper limit of pounds 25,000 to cover the negative equity. The interest charged will be at standard rates, currently 7.74 per cent APR.

The loan is, however, expensive. Borrowers pay a pounds 250 administration fee. In the first year, they will also have to pay an extra 3 per cent of the amount borrowed. There is a further 7 per cent mortgage indemnity charge.

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