Kensington Mortgages is launching its first long-term fixed rate mortgages, allowing borrowers to freeze their monthly payments for between 11 and 40 years.
The Flexi Fixed for Term deals are priced differently depending on the term chosen and amount borrowed but are available up to 95% LTV for new purchases or up to 85% LTV for remortgages.
Rates start from 2.83% at 60% LTV for a 15-year term.
Rates on a 25- and 30-year term, at 60% LTV start at 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 SVR stress rate, which means that many applicants may be able to borrow more than they would on a standard mortgage.
Kensington’s Flexi Fixed for Term deals are portable so long as the new property meets the lender’s criteria.
The products come with free legals and no product fees.
Gifted deposits are permitted so long as they meet the eligibility criteria set out by the lender.
A 0.75% proc fee will be paid on completion to brokers, including mortgage clubs and networks.
No early repayment charges apply if moving home, selling, or a critical illness or death occurs.
Overpayments are allowed up to 10% of the original balance per year.
If a client would like to borrow more money, they have the ability to apply for a further advance, with the option available after 12 months subject to affordability.
Recent research from Kensington Mortgages reveals that 83% of homeowners and renters would consider a long-term fixed rate mortgage.
Kensington has partnered with specialist pensions insurer Rothesay, which has provided funding for the products.
Long-term mortgages are well matched to the pension liabilities it protects.
Kensington Mortgages chief executive Mark Arnold says: “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.”
Rothesay chief investment officer Prateek Sharma says: “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 are 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.”
Original Article from Mortgage Strategy 22/11/21