What does this mean?
Property buyers will soon be able to fix their mortgage for four decades, following the launch of Britain’s first ever 40-year fixed-rate loan. Mortgage which let borrowers lock their rate for longer than 10 years have been scarce since the financial crash of 2008, with risk-averse lenders generally offering fixed-rate deals of between two and five years.
The deal will be available to first-time buyers, home-movers and those remortgaging in England and Wales from next week. The mortgage, which Habito boss Daniel Hegarty predicted would “permanently and profoundly” alter the market, is not subject to early repayment charges or exit fees. It means borrowers will pay the same monthly instalments throughout the duration of deal, something some homeowners favour as it supports future budgeting.
“Historically there had not been a huge interest in longer-term fixed-rate mortgages. However, the market might now be more open to such loans, particularly if they are being offered to first-time buyers with lower deposits”
– Bob Hunt
“It’s always wise for borrowers to review their mortgage as they could find a better rate elsewhere. It will be interesting to see the uptake for these new mortgages and whether alternative lenders will launch longer-term mortgages in the current market to meet demand.”
– Rachel Springall
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