New Mortgage Guides

Other Mortgage Guides

Mortgage Types

Mortgage Tools

Financial Services > Mortgages > 125 per cent Mortgages > 125 per cent mortgages
Bookmark and Share

125 per cent mortgages

125 per cent mortgages were a relatively new loan on the UK mortgage market before the credit crunch of late 2007, and similar to 100 percent mortgages, are fairly self-explanatory.

The 2007/2008 credit crunch in the UK mortgage market severly affected the future of 125 per cent mortgages.

Update: Like the adverse credit mortgage market, the 100 and 125 per cent mortgages niche is simply considered too risky by the majority of lenders due to the severity of the 2007/2008 credit crunch.

For this reason, most mortgage lenders pulled down their 125 per cent mortgage loans from the market, meaning this product is now relatively rare on the UK market and extremely hard to satisfy lending criteria.

Lenders offer borrowers 90 plus percent of the value of their property, with an extra 25 per cent in an unsecured loan to cover the costs of buying a house and any improvements that need making.

Welcome to the guide to 125 per cent mortgage loans.

Who offers 125 per cent mortgages?

Very few mortgage lenders now offer 125 per cent mortgage loans, as more and more have withdrawn their product ranges.

Before the credit crunch, products included the MortgagePlus 125 per cent mortgage from Alliance Leicester, with some lenders lending 100 per cent plus on mortgages for years. These lenders included Northern Rock, Mortgage Express and BM solutions.

What are the benefits of a 125 per cent mortgage?

The lending can exceed 100 per cent without the need for the borrower to look for a secured loan with another lender, possibly costing them more.

Who are 125 per cent mortgages available to?

125 per cent mortgages are available to all sectors of the mortgage market who can prove that an adequate repayment vehicle is in place. This includes 125 per cent mortgages for first-time buyers, next-time buyers, and people releasing equity in their homes.

How do 125 per cent mortgages operate?

Generally, 125 per cent mortgages operate in the following manner: 90 or 95 per cent of the property value is lent as usual, with the balance of the borrowing made up by an unsecured loan. Although called 125 per cent mortgages, these products do not always constitute 125 per cent of property value; in fact this is the accepted maximum.

What are the pitfalls and disadvantages of 125 per cent mortgages?

125 per cent mortgages are usually lent at much higher rates of interest than standard mortgages. Putting down a solid deposit remains the best way for first-time buyers to get on the ladder. Borrowers should also watch out for higher lending charges, which some lenders apply.

Are 125 per cent mortgages available for bad credit mortgage borrowers?

Some lenders may consider mortgage applications for 100 per cent plus mortgages and remortgages for those people who have a bad credit history. This depends on the record of arrears, CCJs, bankruptcy, IVA and repossession.

How should I go about getting a 125 per cent mortgage?

For more information about 125 per cent mortgage loans and to get a 125 per cent mortgage loan quote, please use our Mortgage Enquiry Form and one of our experts will contact you for further assistance. Alternatively, you can give us a call on .

125% mortgage news

Receive Mortgage Advice from a Regulated Advisor

Mortgage advice

There is no better time to be seeking suitable mortgage advice from a Regulated mortgage advisor

Submit your details today for an obligation-free chat and a regulated mortgage advisor will call you back to help you find the mortgage that best fits your needs.

We will only provide your details to one regulated advisor.

Your mortgage

 * Help
 * Help
 * Help

About you


Questions marked with * are required

Please be aware that the advisor who contacts you will be a third party advisor who has no connection with us. There is no charge to you for using this service. We are paid by charging your assigned advisor a fee for this service. Any advice or assistance given to you by a third party advisor does not represent our advice or assistance and is not checked or endorsed by us. It is your decision whether or not you act on any advice or assistance you are given.

By clicking “Proceed” you confirm that:

  • You accept our Terms of use and
  • You would like to be contacted by a regulated third party advisor to discuss your needs.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Financial Services Net Limited and other trusted 3rd parties would like to keep you advised via e-mail or telephone of products, services and other exciting offers we think may interest you. Please untick this box if you do not consent to us contacting you for further information.

Bookmark and Share
news news rss
Mortgages News

Mortgage approvals up by 33% at mutuals

Leeds pulls lowest-ever 1.99% deal after less than a month

First direct slashes rates by up to 0.5%

Mortgage lenders

Browse mortgage lender offersMortgage Rates by Lender

  • Browse current mortgage offers from over 90 lenders.

Worried about mortgage repayments?Worried about Mortgage Repayments?

  • Join our petition to Government to bail out burdened individuals, not just banks.

Free mortgage quoteFree Mortgage Quote

Mortgages in Scotland Mortgages in Scotland

Equity releaseEquity Release

  • Unlock equity in your home.

Switching mortgagesSwitching Mortgages

Home reversion plansHome Reversion Plans

Commercial mortgages Commercial Mortgages

  • Commercial property loans
  • Starting a business?

Arrears & CCJs?

  • Remortgages
  • Sub prime mortgages
  • Arrears, CCJs
  • Self certification
  • Debt consolidation

Protect your mortgageProtect Your Mortgage

  • 3 months free mortgage protection cover

Mortgage Newsletter