Kensington Mortgages is set to launch its ‘Flexi Fixed for Term’ product on 23 November.
The product allows borrowers to fix the rate paid on their mortgage for the full term of the loan, anywhere between 11 to 40 years.
Rates depend on the fixed term chosen and amount borrowed, but are available up to 95% loan-to-value (LTV) for new purchases, or 85% LTV for remortgage, and start from 2.83% at 60% LTV for a 15-year term.
Rates on a 25 and 30-year term, at 60% LTV, are available from 2.85% and 2.90% respectively.
Rates on a 25 and 30-year term, at 95% LTV, are available from 3.71% and 3.77% respectively.
Affordability is based on the fixed interest rate, not on a higher standard variable rate (SVR) stress rate, and it is portable – the mortgage can be transferred to a new property, and the rate and fixed monthly payment will remain the same.
It also allows free legals and no product fees.
Eligible gifted deposits are accepted and a 0.75% proc fee will be paid on completion to brokers, including mortgage clubs and networks.
No early repayment charges (ERCs) apply if moving home, selling, or a critical illness or death occurs.
Overpayments are allowed up to 10% per calendar year of the original balance.
Recent research from Kensington Mortgages revealed that 83% of homeowners and renters would consider a long-term fixed rate mortgage if it provided greater certainty of mortgage repayments.
Kensington has partnered with Rothesay to provide the funding.
Rothesay specialises in investing in long-term, high quality and secured assets like these mortgages.
Mark Arnold, chief executive of Kensington Mortgages, said: “Over the last 12 years we have become accustomed to ultra-low interest rates. Many homeowners have never known anything else.
“But nothing lasts forever, and it looks very likely that we will see a succession of interest rate hikes and we may begin to slowly approach again an historical average.
“A fixed for term mortgage – already very popular in some parts of continental Europe – is likely to become increasingly attractive in a rate rising environment.
“No two people or their circumstances are the same.
“Whether you’re a first-time buyer or homeowner wanting an affordability boost, a self-employed worker worried about remortgaging, or someone wanting greater certainty on monthly repayments – our new Flexi Fixed for Term can help.
“With one fixed monthly payment until the mortgage ends, extra borrowing power, and added flexibility for any life events that may happen, it is that simple.
“A long-term fixed rate mortgage may not always be suitable for everyone, which is why we’ve offered as much flexibility as possible with this product.
“For others, it could be the only way to afford a property.
“Our latest research found out that one-quarter of renters who attempted to purchase a home in the last five years were unsuccessful and of these, more than a fifth did not pass affordability checks and a quarter could not borrow as much as they needed.
“These products could be a serious alternative for getting people onto the property ladder who otherwise would be excluded.”
Prateek Sharma, chief investment officer at Rothesay, added: “As the UK’s largest specialist pensions insurer, Rothesay is well-positioned to support these long-term loans which have an important role to play in the market.
“We are always looking for innovative ways to invest in long-term, secured and high quality assets, and firmly believe that these mortgages can provide the certainty that many borrowers are looking for.
“Through our partnership with Kensington, we’re pleased to support the government’s ambition to make new types of mortgage products available which are purposefully designed to help increase home ownership while providing long-term security.”