A 125 mortgage loan is a loan with an amount of 125% of the borrower’s property value. This means if the borrower’s property is worth $200,000, then a 125% loan would let him borrow an amount of $250,000.
In financing language, the old method of Loan-to-value (LTV) ratio is used for determining 125% of the property’s total value. A 125% loan value is generally considered as relatively riskier than loans with less than 100% of loan-to-value ratio. Traditionally, mortgages loan does not exceed 80% of the property’s value; therefore, 125 mortgage loans carry a higher interest as compared to loans with or below 100% LTV ratio.
Home Equity Loan With 125% Ltv:
A home equity loan allows borrowers to borrow loans against the equity of their property. The amount of loan depends on the difference between the current value of the property and the borrower’s due mortgage value.
If you are thinking about home improvements or want to clear your high-interest debts then home equity loans with 125% of the LTV ratio is the ultimate choice. Most importantly, there are two variations of home loans- fixed-rate loans and HELOC also known as home equity lines of credit.
A 125 home equity loan can be the ideal way for borrowing loans up to 125% of the total equity of their homes. However, to obtain a home equity loan with 125% of the loan-to-value ratio, there are few conditions:
- The applicant must be the legal owner of the property concern.
- Borrowers must have a credit score of at least 600.
Furthermore, there are numerous benefits of a home equity loan 125 LTV that the borrowers are not known to. Some of the merits are:
- Some of the lending institutions provide the feature of fixed interest rates.
- Borrowers are entitled to borrow up to 125% of their home’s equity.
- Borrowers can utilize the funds for home development and enhancement.
- In addition to home upgradation, borrowers can also make use of the funds for repaying personal loans, car loans and educational loans.
- The amount borrowed can also be used for repaying first and second mortgages only if their combined value is less than that.
- The loan can also be used for payment of high-interest credit cards.
125% Ltv Loans:
A Home equity loan 125 Ltv is for those who do not have equity in their houses but require capital for debt consolidation or home augmentation. They are considered as low-cost debts that the borrowers can use for paying off credit card interests and debts. Such loans are also preferred by borrowers because they require minimum conditions such as a FICO score of 580 or above.
People often consider a 125% mortgage loan over other loans due to the fact that it gives them access to more funds, which can be later used for other purposes. It is a more convenient source of capital. Moreover, before you consider borrowing home equity loan, make sure to compare terms and interest rates. Visit us for more information regarding this at http://www.mortgagrefinance101.com.
