HBOS 125 per cent mortgage to be launched

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HBOS 125 per cent mortgage to be launched

HBOS is set to introduce a 125 per cent mortgage - that means the product is worth a quarter more than the house value.

The new mortgage is set to be launched next week, however, industry experts have warned that the move could plunge some people into large levels of debt, tying them to the property for longer than they would wish.

Designed to give fist-time-buyers the chance to get onto the property ladder, the HBOS mortgage aims to offer customers more money to use on things such as stamp duty and household goods.

Nick Gardner, of Chase De Vere Mortgage Management, stated: "By taking a loan of more than 100 per cent of the property's value, you are effectively plunging yourself straight into negative equity and therefore need to commit to the property for some time to give house prices enough time to rise and eradicate the debt."

"But if house prices do not rise, you could be trapped in that property for longer than you would like," he added.

Recent research undertaken by Halifax shows that the average house price in the UK has risen by 187 per cent since 1996, making it increasingly harder for first-time-buyers to enter the market.

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