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Habito launches UK’s longest-ever fixed rate mortgage

Jake Carter

March 10, 2021

Habito has launched the longest-ever fixed rate mortgage, allowing borrowers to access fixed-rate periods of up to 40 years.

From 15 March first-time buyers, homemovers and remortgagors in England and Wales will have access to long-term fixed rate periods starting at 10 years, going up to 40-year fixed rate terms.

The product range called ‘Habito One’ will not include any early repayment charges or exit fees for the duration of the mortgage.

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

LTVs start from 60% LTV up to 90% LTV and the lender intends to introduce options at up to 95% LTV from early summer within this range.

Customers only pay product fees when they take a ‘Habito One’ mortgage or increase their borrowing.

‘Habito One’ mortgage holders will also be able to port their mortgage without paying any exit or early repayment charges.

Monthly repayments will stay the same throughout the lifetime of the mortgage, guaranteeing peace of mind and full control over monthly budgeting forever, according to the lender.

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

Looking to data collected by Habito, 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’ will be available exclusively via Habito.

Daniel Hegarty (pictured), founder and chief executive of Habito, said: “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 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.

“Worse still it demands that we continually switch to a new product before we get stung by a higher rate.

“This cycle is costly, time consuming and repetitive – roughly £1,000 each time up to 10 times over the length of the mortgage.

“And while Habito provides free mortgage advice, some brokers still charge around £500 to advise on a remortgage, and that adds up over the lifetime of a mortgage.

“Three quarters of homeowners (73%) said they’d like the option to do more with their home finances in 2021 yet half are unable to remortgage in the next six months because they’re tied into their current deals.

“Our extensive research into long-term fixed rate mortgages tells us that homeowners value flexibility and certainty above all else.

“The current system is designed to offer neither.

“Our Habito One mortgage will allow people to plan their lives, make their next move, pay off their mortgage – all without punitive charges.”

“Habito One permanently and profoundly alters the landscape of UK mortgages – it marks the end of compromises and unfair trade-offs, and the beginning of a better, fairer standard for how we buy and own homes.

“To reach this point we’ve had to re-engineer every part of the home-buying journey.

“We’re really excited to be launching a range of products which are, at long last, built around what people want and need when budgeting for the future: certainty, protection and flexibility.”

In response to the launch Colin Bell, co-founder and chief operating officer at Perenna, said: “At Perenna, 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 2- or 5-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.”

Kevin Roberts, director at Legal & General Mortgage Club, added: “We should always welcome genuine innovation in the mortgage market and we welcome this initiative from Habito offering a fixed rate mortgage for as long as 40 years.

“Not only does the launch boost product choice for consumers, but long-term mortgages also have the potential to be a viable route for many buyers to help them achieve their housing ambitions.

“That said, borrowers have so far taken little interest in existing long-term fixed rate mortgages and it remains to be seen just how popular Habito’s new product will really be.

“Further information on Habito’s loan-to-income limits for these mortgages for example will also help to determine exactly which borrowers could benefit from these solutions.

“For many borrowers, a 2- or 5-year fixed rate mortgage may still prove to be more financially appealing in the short term and we would encourage those looking to buy or refinance to speak to an independent mortgage adviser and benefit from professional support.”


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