Kensington Mortgages has launched a range of long-term fixed rate mortgages in partnership with Rothesay, with terms of up to 40 years.
The Flexi Fixed for term range allows borrowers to fix the rate paid on their mortgage for the term of their loan, which can be between 11 and 40 years.
The range is available for new purchases and re-mortgages, with new purchases available up to 95% Loan to Value (LTV) and re-mortgages available up to 85% LTV.
Rates start from 2.83 percent to 60 percent LTV for a term of 15 years. For a term of 25 and 30 years at 60% LTV, rates start from 2.85% and 2.9% respectively.
For terms of 25 and 30 years at 95%, LTV rates start at 3.71% and 3.77% respectively.
Affordability is calculated on the fixed interest rate, rather than the standard variable rate, which can allow customers to borrow more. Kensington said this could benefit first-time buyers or those looking for a more expensive property.
The mortgage is transferable and can be transferred to new property and has free legal rights and no product fees. A fee of 0.75% will be paid to brokers, which covers clubs and mortgage networks.
No prepayment charges apply in the event of a move or sale of a house, serious illness or death. Overpayments of 10 percent per year are allowed and customers can get an additional advance after 12 months subject to affordability.
The company had previously hinted at its plans for a long-term fixed-rate launch, with new Kensington Mortgages chief commercial officer Craig McKinlay saying he plans to enter the space and these products would improve affordability. for first time buyers.
Marc Arnold (on the picture), managing director of Kensington Mortgages, said that over the past 12 years there had been extremely low interest rates, but that looked set to change with successive interest rate hikes on the horizon .
He said that a fixed-term mortgage, which was popular in Europe, was “likely to become more and more attractive in a rising rate environment”.
He added: “There are no two people or their circumstances are not the same. Whether you’re a first-time buyer or homeowner looking to improve affordability, self-employed worried about remortgage, or someone who wants greater certainty on monthly repayments, our new fixed-term flexi can help you. to help. With a fixed monthly payment until the end of the mortgage, additional borrowing power, and increased flexibility for any life event that may arise, it’s that simple.
Arnold said that a long-term fixed rate may not be right for everyone, which is why the product has increased flexibility, but it was a “serious alternative to getting people on the job. ‘property scale that would otherwise be excluded.
Prateek Sharma, Chief Investment Officer at Rothesay, said: “As the UK’s largest specialist pension insurer, Rothesay is well positioned to support these long term loans which have an important role to play in the market.
“We are always on the lookout for innovative ways to invest in long-term, secured, high-quality assets, and strongly believe that these mortgages can provide the certainty that many borrowers are looking for. Through our partnership with Kensington, we are delighted to support the government’s ambition to deliver new types of mortgage products specifically designed to help increase homeownership while providing long-term security.
Economic Secretary to the Treasury John Glen said: “I am delighted to see new products like this and I am always delighted to see innovation in the UK mortgage market.
“A greater choice of products creates more competition and more options for consumers, in this case especially those who value the certainty of their repayments over a longer period.”
Long-term fixed rates have so far not seen a significant uptake in the UK, with figures from UK Finance showing that 10-year fixed rates accounted for less than one percent of total loans for the UK. Most months since 2015. However, new products have appeared. market with Habito launching a 40-year fixed rate mortgage earlier this year.