Habito is launching a fixed-rate lifelong mortgage that allows you to lock yourself in for up to 40 years

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(i) Only comparison according to tariff table – does not take into account product fees.

What are the pros and cons?

If you find the right mortgage deal for you, you can save 1,000 euros. However, getting the right mortgage doesn’t necessarily mean you have to fix the longest time or even the lowest interest rate. When in doubt, speaking to a mortgage broker is often the best course of action. Even so, there are some clear advantages and disadvantages of these habito deals:

Benefits:

  • You can rest assured of what you will be paying for your mortgage for possibly up to 40 years. So if you pay £ 500 / month in the first year, you will still be paying £ 500 / month in 39 regardless of whether interest rates have skyrocketed elsewhere.
  • You can save £ 1,000 on mortgage fees. The mortgage agreement fee for any of these offers is expensive at £ 1,995, but you only have to pay it once (unless you need to borrow more in the future). By comparison, if you’ve rescheduled to various two- or five-year fixes five or ten times in the course of your mortgage repayment, you could end up paying product fees in excess of £ 10,000.
  • No early repayment fees. As mentioned earlier, these mortgages are interesting because you never have to pay an early repayment fee if you later want to reschedule or overpay the mortgage (even in full) for more flexibility.

Disadvantage:

  • Habitos interest rates aren’t the cheapest. We can only compare Habito’s 10- and 15-year ranges directly – both can be exceeded by the interest rate alone. Cheaper fixes for two and five years are also available elsewhere, although here you are not strictly comparing on a comparable basis given the much shorter mortgage term.
  • You may miss out on falling mortgage rates in the future. There is nothing to say that interest rates won’t continue to fall in the future – even though they are currently at all-time lows. Since you would be locked into one of these mortgages, you would have to get out of that mortgage first, i.e. reschedule, if you wanted to switch to a lower interest rate. Even so, getting out of one of these Habito mortgages prematurely is not punishable.
  • The product fee with Habito’s lifetime mortgage streak is high. At £ 1,995, it’s roughly twice the typical arrangement fee for other fixed rate deals, although you may only have to pay it once. Remortgaging usually comes with a fee of around £ 1,000 – which does not depend on the duration of the fix. So a five-time remortgaging term over the term of a standard mortgage will cost you a total of more than £ 5,000 in product fees.

You can use our free mortgage calculator to compare interest rates. You may also want to get free advice from an independent mortgage broker. For help finding a broker, see our guide to cheap mortgages.



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