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Northern Rock are to pull the plug on the “Together” loans they offered amid fears the mortgages would render the bank open to more bad debt.
The loans which offered first time buyers a mortgage of up to 95 per cent of their property's value and a personal loan of up to 30 per cent on top of that, will no longer be available from the soon to be nationalised bank.
The decision will leave thousands of borrowers who had chosen the “Together” package having to face up to a huge hike in repayments and leave them stranded on the Newcastle based banks, standard variable rate.
This move comes on the back of four other lenders; Abbey, Alliance & Leicester, Coventry Building Society and Godiva, deciding to scrap their deals for more than 100 per cent mortgages.
Northern Rock's decision is in line with their strategy to remove itself from the mortgage market until its crippling financial problems are resolved.
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