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Habito unveils 40-year mortgage

Mortgage broker and buyer service Habito has launched ‘Habito One’, a mortgage fixed between 10 and 40 years.

The mortgage won’t have any early repayment charges during the duration of the mortgage, while monthly payments will stay the same during the lifetime of the mortgage.

Daniel Hegarty, founder and CEO of Habito, says “The mortgages we have available to us today are remnants of a different age and a different power dynamic between customers and lenders.

“The future has never been less predictable and we need our homes to provide us with safety and financial security.

“The vast majority2 of us on a mortgage that’s fixed for two to five years are effectively trapped in a system that doesn’t fit our financial future or our home-buying habits3. Worse still it demands that we continually switch to a new product before we get stung by a higher rate.”

The long-term fixed rate mortgage model is new for the UK but commonplace in countries like the US, Denmark and France.

According to Habito around a third (30%) of UK mortgage-holders said they would be interested in switching to a long-term fixed rate mortgage, citing flexibility, certainty and protection against interest rate rises as their key reasons.

Habito One mortgage rates start at 2.99% and are fixed for the full contractual term of the mortgage.

A range of loan to value (LTV) options for homebuyers from 60% LTV up to 90% LTV will be available from launch. Habito plans to roll out 95% LTV mortgages from early summer.

Colin Bell, chief operating officer of Perenna, said: “We believe that long-term fixed rate mortgages are the future of Britain’s housing market. These products will ultimately give more people the opportunity to step onto and up the property ladder.

“The traditional two- or five-year approach to lending is not working for many borrowers. Long-term fixed rate products, without the risk of reverting to SVR, offer a viable alternative. Habito’s long-term proposition is a step in the right direction for the market.

“Perenna will be launching its own range of fully scalable, flexible fixed for life mortgages at competitive rates later this year – providing borrowers with both certainty and flexibility. Our aim is to develop a mortgage market that works for borrowers and allows them to access the funding they need for the homes they really want.”