Habito has launched a fixed rate mortgage with a term of up to 40 years.
Available from 60 percent LTV to 90 percent LTV, Habito One begins with a 10-year option and increases from five years to 40 years.
Habito said it plans to introduce a 95% LTV option “later this year”.
At 60 percent LTV for 10 to 15 years, the rate is set at 2.99 percent and at 90 percent LTV, 4.39 percent.
The rate for a 60 percent 40-year LTV mortgage is 4.20 percent and, at 90 percent LTV, 5.35 percent.
There is a product fee of £ 1,995 in all cases, paid at the start of the mortgage and if borrowers wish to increase their loan amount.
In addition, there are no prepayment charges and borrowers will be able to transfer their mortgage at no additional cost.
When asked about loan-to-income ratios, Habito replied that the calculation would “comply with Bank of England recommendations”.
Habito One will be available from March 15th.
Founder and CEO Daniel Hegarty says, “The mortgages we have today are vestiges of a different age and different power dynamics between clients and lenders.
“The future has never been less predictable and we need our homes to provide us with security and financial security. The vast majority of us with a fixed mortgage for two to five years are effectively trapped in a system that does not match our financial future or our home buying habits.
“Worse yet, it requires that we continually switch to a new product before we get bitten by a higher rate. This cycle is expensive, long and repetitive of around £ 1,000 each time up to 10 times over the life of the mortgage. And although Habito does provide free mortgage advice, some brokers still charge around £ 500 to advise on a remortgage, and that adds up over the life of a mortgage.
Responding to the news, Kevin Roberts, Director of the Legal & General Mortgage Club, said: “We should always welcome real innovations in the mortgage market and we welcome this initiative from Habito which offers a fixed rate mortgage for 40 years.
“Not only does the launch increase product choice for consumers, but long-term mortgages also have the potential to be a viable avenue for many buyers to help them achieve their housing ambitions.
“That said, borrowers have so far shown little interest in existing fixed-rate long-term mortgages and it remains to be seen how popular Habito’s new product really will be.
“Additional information on Habito’s LTI limits for these mortgages, for example, will also help determine exactly which borrowers could benefit from these solutions. “