A 125% secured loan is a loan secured by a mortgage on your home whereby the lender is advancing 25% more than your home is worth.
The first suggestion we will make if you are thinking of taking out such a loan is do your homework first to see which lenders are accommodating this type of credit. First and foremost it is a risky loan, therefore the criteria to get one will be stringent. If you have lost your job or your credit is spotty, you may have a hard time getting this type of credit.
If however, you have a valid reason for wanting to borrow more than your home is worth, for example, a temporary situation, where you are improving your home and will be bringing it up to acceptable values within a short period of time, then you may find that this type of loan may work for you.
Beware that there may be excessive points, fees and a higher interest rate. However, if in fact it is a temporary situation, it just may work for you. If it is not, you may be in for a declination letter, so why waste your time?
First you need to submit an application for the credit requested. At times you may be able to apply online. Depending on the lender, you may have to go into a local office and prove that you are who you say you are. Secondly, the purpose is important. So ask yourself, just exactly why are you applying for a loan that is for more than your home is worth? Lenders are in the business to make prudent loans. If the loan doesn’t make sense to you, chances are it won’t to a lender. Lastly, the loan may be underwritten for a short term: somewhere from three years to thirty years, once again depending on the purpose.
If you really think about it from a lenders perspective, is this loan really for you? If you can answer “yes,” then just maybe this loan is for you. Think about the pros and cons of 125 secured loans before you apply.
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