125% Home Equity

home equity loans LTV

LTV Home Equity Loan – A 125% home equity loan is a second mortgage that requires no equity but the loan allows you to borrow up to 125% more than the current Combined Loan To Value (CLTV) ratio of your home. The CLTV is the proportion of more than one loan secured by your home in relation to its value. This is different than Loan To Value ( LTV ), which only involves the proportion of a single loan in relation to its worth.

Wikipedia provides these examples to help folks understand the difference between LTV home equity loan and CLTV :

Loan To value :

Property valued at $200,000.00

Initial mortgage = $180,000.00

LTV = 90%

Mixed Loan To Worth :

Property priced at $200,000.00

Initial mortgage = $180,000.00

2nd mortgage = $45,000.00

$225,000 Total mortgage balance

CLTV = 112.5%

125% loans are sometimes fixed IR installment loans, and they are particularly well-liked among first time home buyers who don’t yet have equity in their houses for debt consolidation, making home enhancements, purchasing furniture, landscaping, consolidation of auto loans, personal loans and other high-interest loans, paying medical expenses and college education. 125 loans might also be used for mortgage consolidation of a current 2nd mortgage.

Even with rising rates, a 125% loan offers borrowers lower rates than mastercards and personal loans, and it might also provide substantial tax benefits. When used wisely, 125 home equity loans could be a relatively inexpensive method of borrowing money for huge expenses and debt consolidation.

125% home equity loans are for those who plan to remain in their home till their property worth increases significantly as the home cannot be sold unless the home equity loan is paid off as well as the first mortgage. Also, because banks face a higher possibility of default due to there being no equity in the home, the IRs are higher than those of a traditional home equity loan.

125% home equity loans usually require that the borrower has good credit. However, even if your credit is imperfect, you’ll still be in a position to qualify for a 125% home equity loan. If not, you may wish to consider mortgage refinance or a standard second mortgage once your FICO credit worthiness scores improve.

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5. First Time Home Buyer Loans
6. Bad Credit Home Purchase Loan
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