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40 Year Fixed Rate Mortgage: the future of house buying?

A broker has launched the UK’s longest-ever fixed rate mortgage, with no early repayment charge or exit fees - the first product of its kind.

The ‘Habito One’ will be available from next Monday in England and Wales to first time buyers, existing owner occupiers moving home, and to those seeking to remortgage.

Borrowers can lock in their rate at the beginning of the term - meaning someone securing a mortgage this month would have a fixed rate up to March 2061. Monthly repayments would stay the same throughout the lifetime of the loan.


“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” claims Daniel Hegarty, founder and chief executive of Habito.

He continues: “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.”

The broker claims that in a survey it has discovered three quarters of homeowners would like the option to do more with their home finances yet many are unable to remortgage in the next six months because they’re tied into their current deals. 

“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” insists Hegarty.

The long-term fixed rate mortgage model is new for the UK but can be found in the US, Denmark and France. 

Habito One mortgage rates start at 2.99 per cent and are fixed for the full contractual term of the mortgage. A range of loan to value options for homebuyers from 60 to 90 per cent LTV will be available from next week, with a 95 per cent LTV available from the summer.


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