Habito One, being hailed as the ‘longest ever fixed rate mortgage in the UK’, offers borrowers a guaranteed rate for up to 40 years.
The product, which comes onto the market next Monday (15 March), has rates which start at 2.99% and go up to 5.35% and will be available for borrowing of up to 90% initially. However, it will increase up to 95% later in the year.
The launch comes just days after the government announced its intention to offer the 95% mortgage guarantee to customers and also as emerging lender, Perenna, awaits its banking licence to offer ‘fixed for life’ mortgages to the market.
Martijn van der Heijden, Habito’s chief financial officer, told Mortgage Finance Gazette, Habito One was likely to appeal to first-time buyers who were searching for certainty despite potential job changes and house moves. Indeed, the mortgage can also be ported.
But he also expected people who had found their ‘forever home’ to be a big market for the new deal.
Customers will be able to apply for the mortgage via Habito, using an online process where they can also speak to an adviser if necessary.
This process would be ‘advised’ therefore only those for whom the product was deemed suitable would be recommended to apply. Where another product was better, the customers would be advised to opt that instead.
US model
But while these products are a new concept in the UK, the model is commonplace in countries such as US, Denmark and France.
What’s more, Habito said when asked, around a third (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.
Daniel Hegarty, founder and CEO of Habito, said the mortgages we had available to us today were 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,” he said.
“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.”
Product details
Habito One mortgage rates start at 2.99% and are fixed for the full contractual term of the mortgage. A range of loan to value (LTV) options for homebuyers from 60% LTV up to 90% LTV will be available from launch.
Habito plans to roll out 95% LTV mortgages from early summer.
Habito One – Pricing table (Source: Habito)
| Mortgage term (years) | 10–15 | 16–20 | 21–25 | 26–30 | 31–35 | 36-40* | |
| Product fee | £1,995 | £1,995 | £1,995 | £1,995 | £1,995 | £1,995 | |
| ERC | None | None | None | None | None | None | |
| LTV | 60% | 2.99% | 3.29% | 3.49% | 3.59% | 3.84% | 4.20% |
| 75% | 3.29% | 3.39% | 3.59% | 3.69% | 3.94% | 4.30% | |
| 80% | 3.59% | 3.69% | 3.84% | 3.94% | 4.19% | 4.55% | |
| 85% | 3.89% | 3.99% | 4.14% | 4.24% | 4.49% | 4.85% | |
| 90% | 4.39% | 4.49% | 4.64% | 4.74% | 4.99% | 5.35% | |
*Indicative rate correct as of 8 March 2021
Hegarty added: “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”.
