There is no denying buyers need assistance when stepping onto the property ladder. There is a lot to be said for finding a mortgage that is affordable. For many people, the thought of extending their mortgage carries positive and negative elements.
The positive side comes with spreading the cost of the mortgage out over more payments. This helps to lower the monthly fee, and this is a crucial factor for many would-be property buyers.
Of course, by extending the length of the mortgage, the total amount paid by the buyer is higher. The cost of property ownership will increase in the long-term.
Do you want to be paying a mortgage for the rest of your life?
There is also the outcome that people will be paying their mortgage for their entire working life. The longest fixed rate mortgage, with no exit fees or early repayment fee has caused quite a stir.
There is an opportunity for buyers to benefit from a fixed rate mortgage through to March 2061. Yes, it is a 40-year fixed rate mortgage, and it is likely you will either love this option or be terrified by the idea.
With first-time buyers being older these days, a 30-year-old using this style of mortgage will be tied into it until they are 75!
Daniel Hegarty is the founder and chief executive of Habito, and he 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.”
Daniel continued by saying; “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.”
Can you switch your mortgage right now?
The company claims they have researched the market, and found that 75% of property owners are keen to do more with their property deals. However, they also said many property owners are unable to remortgage for most of this year as they are tied into their current deals.
Hegarty also said; “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.”
While this style of mortgage is new for the United Kingdom, it is familiar for property buyers in France, Denmark and the United States of America.
Anyone looking to arrange informed and up to date guidance regarding a mortgage should speak with an experienced professional.