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Mortgage deals and the 90% rule

A number of mortgage holders have received very alarming news in the post of late as a number of mortgage companies look to realign their business and reassess their potential risks. A number of fixed rate mortgages have been taken out over the last few years which required customers to ensure their mortgage debt was no more than 90% of the value of their home, over the life of their mortgage. In the good times this was no problem as property prices continued to rise and the ceiling between mortgage debt and the value of a customer's properly continued to increase. However, things have certainly changed over the last few months.

Abbey for one has been contacting mortgage holders to suggest that their outstanding debt now represent more than 90% of their property's values and they need to realign the situation. In effect, Abbey are asking customers to increase contributions to their mortgage and introduce any lump sum payments which will bring the ratio back down below 90%. In these times of financial trouble fewer and fewer people are in such a position and face the possible threat of eviction.

Many experts are questioning how a fixed-rate deal could have been signed some time ago, with mortgage payments not in arrears and still the banks are chasing customers. There is a suggestion that customers are taking on all of the risk of property ownership while the banks look to realign their liabilities on a regular basis.

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