Nationwide celebrates 1st anniversary of 25 year fixed rate mortgage
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The Society first introduced the mortgage in March last year, when it sold out in just five weeks. The mortgage was re-launched in July and has since remained a permanent fixture in its range. The Chancellor, Alistair Darling, has recently announced that he intended to outline plans to encourage more lenders to offer this product within his first budget, on 12 March.
Nationwide remains the only major high street lender to offer a 25 year fixed rate mortgage. So far, the product has proved most popular amongst first time buyers, although it is available for any borrower with a term of 25 years or longer.
To aid its appeal to borrowers concerned about being tied-in for the long term, Nationwide's mortgage is fully flexible, allowing borrowers to 'get out' of the mortgage after 10 years without incurring any early repayment charges. In addition, the deal offers great value for money. With just one reservation fee to pay, borrowers could save hundreds or thousands of pounds on fees compared to taking several shorter term deals*. Plus borrowers will save time by not having to choose and arrange a new deal every few years.
Matthew Carter,
director for mortgages at Nationwide, said: "Our experience is that the
25 year fixed rate mortgage has a place in the market and offers
long-term stability for borrowers who want to protect against
fluctuations in interest rates. We also recognise that people who want
a mortgage for life don't necessarily want a house for life which is
why the mortgage is fully portable, allowing borrowers to take it with
them as they move up the property ladder."
*For example - possible savings on reservation fees
If borrowers take one 25 year fixed rate deal with Nationwide they will pay just one reservation fee - £599
If in the same period they were to take five 5 year deals that had a reservation fee of £499 per deal, they would spend £2495 on reservation fees in total - £1896 more than if they took Nationwide's 25 year fixed rate deal.
If borrowers were to take twelve 2 year deals that had a reservation fee of £499 each they would pay £5988 in total on reservation fees - £5389 more than if they took Nationwide's 25 year fixed rate deal.
This assumes borrowers pay their reservation fees upfront. If borrowers chose to add their product reservation fees to their loan, or chose products with higher fees the savings would be even greater.