Lloyds launches negative equity deal

by Aaron Strutt

Jan 31 2011

Lloyds Banking Group have launched a new deal for existing customers in negative equity. The Second Steppers scheme will allow borrowers who are in negative equity of up to 120% loan to value to move to a property of the same value, buy a bigger home or downsize.

Customer's can move without increasing their existing levels of borrowing and channel any additional funds into their new home. The scheme is being launched on February 2.

Lloyd's says that a typical second stepper is someone who bought their first home at the beginning of 2008 and now finds that they are unable to move home because of negative equity, but might want to move up the housing ladder or move to similar property in a different location. 

Aaron Strutt, a broker at Trinity Financial, said: "It is a welcome addition to the market and it is good that Lloyds are giving those in negative equity the option to move, but this is something that should be considered very carefully. If borrowers have money available it may make sense to pay off a chunk off of the loan.

"Not all Lloyd's customers will qualify and the bank will re-credit score borrowers wanting to use this option. Other lenders offer new rates to borrowers in negative equity but they don't generally let them move home."

January 31, 2011