Negative Equity Mortgage Solution

Lloyds Banking Group has launched a mortgage product aimed at Mortgage borrowers that have a negative equity mortgage. This comes as inflation rockets, growth in the economy falls below zero and Mervyn King the Governor of the bank of England recently informed us that we are all in for a choppy year. So is this move by Lloyds a brave move or a stupid move by the partially state owned bank or are they genuinely identifying niche areas in the mortgage market that need help.


The banking industry needs to help restore confidence in the mortgage market by relaxing their strict lending policies. It was announced that the number of first-time borrowers was at it lowest for 25 years. Estate agents had continued to see less people through their doors this year even after the disastrous weather in December which kept many people at home. This is not helping an already depressed mortgage industry.


Lloyds Banking Group have recently launched their new Second Stepper mortgage product which will allow homeowners in negative equity to move home and borrow up to a maximum of 120% LTV (loan to value). The new Lloyds mortgage product allows homeowners that meet their lending criteria to sell their home and move to a new home of the same value, or a bigger home or they may downsize. Customers will be allowed to reduce their borrowing from the sale of their property and in exceptional situations they will be able to increase their existing level of borrowing depending on their income and circumstances.


A negative equity mortgage occurs when the value of your home falls below the value of the mortgage that you secured on your property. Borrowers only discover they are in a negative equity problem when they come to sell their home or have it valued. Then they discover that they now owe more money then they originally borrowed from the bank or building society. Negative equity is not an issue until you come to sell your home in order to move.


Many homeowners discover that they cannot move home until they have paid off the shortfall in their mortgage which has been caused by their home having lost more value than their mortgage balance owed. Then if they do sell up and move they need to find a 15% deposit to secure their next home. First-time buyers are facing the same problem at present. Lloyds Bank should be praised for their move and lets keep our fingers crossed that they can lead the way in 95% first-time buyer mortgages and remortgages.


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Contributing author Mark Aucamp has provided Talk Money Blog with regular Money Saving Advice and Articles. Mark has extensive experience in providing Debt help, Free Mortgage Advice and solutions.. For more money saving tips please visit my website at => http://talkmoneyblog.co.uk