Perenna, a burgeoning mortgage lender in the United Kingdom, is presenting a unique opportunity to home buyers. The offer? Borrowing up to six times your annual income with a fixed-rate mortgage term that can stretch up to 40 years. The initiative, primarily angled at home movers and first-time buyers, is being launched via a pilot scheme in conjunction with mortgage broker L&C Mortgages.
Perenna's mortgage offering is a game changer in the current UK mortgage market. With the capability to lend up to 95% of a property's value, this product is specifically designed to enable individuals to borrow more relative to their income as compared to short-term fixed-rate mortgages. This approach not only provides an increased borrowing capacity but also addresses the issue of market risk.
Unlike traditional lenders who conduct stress tests on hypothetical higher rates after the initial fixed period ends, Perenna's long-term fixed-rate mortgages remove this hurdle. This means customers are not subjected to the uncertainty of potential rate increases, thereby providing a more secure and predictable repayment plan.
Early Repayment Charges and Customer Flexibility
One of the most appealing aspects of Perenna's novel mortgage scheme is its approach to Early Repayment Charges (ERCs). ERCs are only applicable for the first five years, giving customers the flexibility to remortgage without penalties thereafter. This is a significant departure from the practices of other lenders and one that is likely to resonate with customers seeking flexibility in their mortgage arrangements.
While the potential to borrow more is undeniably appealing, especially for first-time buyers, the commitment to a fixed rate for an extended period may raise some eyebrows. The UK's mortgage market is primarily composed of shorter-term deals, unlike in some European countries where long-term deals are more common. Therefore, this new offering from Perenna may require some adjustment from UK borrowers.
However, it's worth noting that the security of a fixed rate over an extended period could be a significant advantage, particularly in uncertain economic times. As the lending landscape continues to evolve, it remains to be seen how UK borrowers will embrace this new long-term fixed-rate mortgage offering from Perenna.