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Last updated on January 3rd, 2022 at 10:44 am
On Tuesday, Kensington Mortgages with the backing of Rothesay, a huge pensions insurance specialist launched a new mortgage product with a 40 years fixed rate.
Even if it is beneficial the brokers feel that such products are not suitable for many.
Kensington is a non-bank mortgage provider and depending on the length of repayment and the size of the loan compared to the value of the home the company feels that borrowers could fix their rate for anything between 11 and 40 years.
The condition is that the applicants should be under the age of 70 at the end of the mortgage term.
Another online lender Habito had launched a deal for up to 40 years at the beginning of the year.
Borrowers have been applying for longer-term fixed-rate deals to take advantage of the low mortgage rates.
Lenders are offering more than 100 different 10-year products, According to financial information service Moneyfacts, knowing that the Bank rate will rise soon, now lenders are offering more than 100 different 10-year products.
The longer-term mortgage is also backed by the government saying that it will bring more certainty for borrowers when the rates will be higher in the future.
However, brokers point out that there are still plenty of considerations that create risks for borrowers.
But it would also mean that the borrowers would be paying higher interest for a longer number of years.
And if they needed to borrow more in the future it could prove costly because they would be tied into a rate.
If borrowers pay faster the home value and equity rise and they are eligible for cheaper deals in the future, which they would miss because of fixing a rate for a long time.
There should also be a consideration of how to pay for a long-term mortgage in later life.
Reference Source: Yahoo.com
