This is not available to new customers. The maximum LTV for existing customers taking a new deal at Nationwide remains at 95%.
Nationwide remains a very prudent and cautious lender with a track record of low arrears, low possessions and has a low LTV (loan-to-value) mortgage book. As the borrower is required to put down a deposit of at least 5%, under this scheme, the LTV and the risk to Nationwide will reduce as a result of the transaction.
Nationwide introduced this option on 10 June 2009 for existing customers only in the following particular circumstances:
- - they are in negative equity
- - they need to move home
- - they meet our strict lending criteria and
- - they have a good credit record.
The Society does not anticipate, and has not seen, a great demand for this service.
Borrowers in these unique circumstances are simply able to transfer part of their existing negative equity with them when they need to move home - as illustrated below the actual value of the negative equity and the LTV will reduce in all circumstances.
The maximum LTV available is 95% on the new property plus the remaining negative equity amount carried forward from the current property. The customer will need to pay a 5% deposit on the new property from their own funds.
Both the main loan and the associated negative equity top-up are restricted to three and five year fixed rate products to protect the customer from potential payment shock over the short term and are only available on a repayment basis.
Rates available on the main loan match those available to existing customers not in a negative equity situation who are moving home with a 95% LTV and are currently:
* Main loan up to 95% LTV: 6.73% (3 year fixed) and 7.48% (5 year fixed)
* Top-up loan covering 100-125% LTV: 7.23% (3 year fixed) and 7.98% (5 year fixed).
Andy McQueen, director of mortgages at Nationwide said: "Nationwide is a responsible lender and our negative equity policy is an appropriate and prudent response to market conditions and demonstrates our continued commitment to supporting our customers."
