What are 125% Secured Loans?
The term “125% secured loan” is actually something of a misnomer, because only part of the loan is actually secured. Typically, the secured part of the loan is for between 90% and 95% of the value of your property (with the property acting as the security) and the other 30% – 35% is unsecured. So a 125% secured loan is actually only a partially secured loan. Lenders who offer 125 secured loans offer both the secured and the unsecured parts of the loan at the same interest rate, as long as those two parts of the loan continue to be linked. In the UK, there are different regulations applied to secured and unsecured loans. So for regulatory purposes the two parts are treated separately. The unsecured 30% – 35% component of the loan would not be regulated by the FSA (Financial Services Authority).
