The online mortgage broker Habito has offered a never seen before mortgage on the market. The 40-year fixed-rate mortgage has never previously existed in the UK. This mortgage deal would give the customer a fixed rate for four decades, enabling them to know exactly what their costs are going to be for that period. Standard mortgages usually offer between one and five years of fixed rates, although there are some ten-year deals available. While this mortgage deal does seem to be a generous offer, there are a number of other costs and aspects to consider before deciding if this is the right mortgage.
To start with, all mortgages offered by Habito have a fee of £1,995 that must be paid upfront – a cost that is considerably higher than those charged by other mortgage lenders. While this mortgage deal has no early exit fee, there is a strong chance that many people will want to move within that 40-year period. Any customers with this mortgage who do move house and need to increase their borrowing will end up paying the upfront fee again along with other costs, such legal fees and for the conveyancing process.
There is no doubting the security on offer with such a mortgage deal. Knowing what the mortgage payments are going to be for an extended period enables the customer to plan around it and know what is available for other outgoing expenditures. If a customer no longer wants to continue with the 40-year deal, then they can leave it and pick up another option. Even if the home owner does choose to move and buy a property somewhere else, they do not have to look for new deals, as the mortgage is portable. This means the customer avoids going into a whole new cycle of costs, many of which can really start to build up, according to a report by Money Saving Expert. That is not to say all costs need be too high: customers can shop around for good deals, such as those from https://www.samconveyancing.co.uk/conveyancing-process.
There are some aspects that may perhaps reduce the attractiveness of such a long-term mortgage rate. The rate of competitiveness is less than what could be offered by more competitive five- to ten-year mortgage deals, which still provide long-term fixed rates and with the associated costs also being kept down. Additionally, this mortgage deal is only available in England and Wales and this mortgage is only available through Habito. The interest rates offered here are not the cheapest available in the market – typically 0.5-1% more expensive. While interest rates are at historic lows, there is still the possibility that they could go down even more in the future – something that customers with this mortgage deal would potentially miss out on.
There are both up and downs to this type of mortgage deal; it is advisable to get independent advice. Nevertheless, the creation of this mortgage deal is a new and exciting step.a