Habito aims to shake up the market with its latest products, available from Monday. Fixed-rate terms ranging from 10 to 40 years will be available to first-time buyers, home movers and people looking to re-mortgage in England and Wales. The Habito One mortgages will be available to borrowers with deposits as low as 10 percent. And it plans to add five percent deposit deals to its range in early summer.
Habito said while its new deals come with a £1,995 product fee, it will not make early repayment charges or exit fees for the duration of the mortgages.
It says this will enable customers to lock into a particular rate, giving them certainty over their payments and safeguarding against future possible interest rate rises, while still having the flexibility to switch or move home.
Monthly repayments will remain the same throughout the lifetime of the deal, removing the cycle of either monthly payments rising and falling with interest rates or remortgaging.
Daniel Hegarty, founder and CEO of Habito, said mortgages currently available “are remnants of a different age”, but its deals “permanently and profoundly alter the landscape of UK mortgages”.
He added: “The vast majority 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 habits.”
A borrower with a 10 percent deposit could get a mortgage at 4.39 percent for up to 15 years. With a 40-year deal, the rate would potentially be 5.35 percent.
Rachel Springall, a finance expert at Moneyfacts.co.uk, said: “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.
“At the moment, the average 10-year fixed mortgage rate is 2.84 percent.”