What is 125% LTV loan all about?
125% LTV (Loan To Value) loans allow the individual to borrow monies beyond the value of their home. For example if a home is worth $100,000.00 and the mortgage debt on the house is also $100,000.00, a 125% LTV loan would allow the debtor to borrow an additional $25,000.00 with the result being the total debt secured by the house after the loan would be 125% of the value of the home. While this type of loan opens the door for some individuals who may otherwise have no access to money it comes with a price. The interest rates for these loans typically run much higher that other mortgage loans and origination fees to set the loan up can be as much as 10% of the loan balance.
