L&C launches ERC-free long-term fix

The rate will be fixed at 5.99 per cent for any term up to a maximum of 30 years. The deal is available for both purchases and remortgages and has an arrangement fee of 2 per cent, which can be added to the loan. Borrowers will receive a 2 per cent loyalty bonus of the outstanding balance in year 10 and again in year 20.

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The maximum loan-to-value is 85 per cent, and borrowers will receive £500 cashback on completion for remortgages.

A survey by L&C of 1,200 of its customers found 48 per cent would consider a 25-year fixed rate. However, 68 per cent of those said they would not want ERCs of more than five years.

James Cotton, mortgage specialist at L&C, said: “Our survey shows that while borrowers are attracted by the security that long-term fixes can offer, the ERCs that go with them are a big turn off. This deal solves that problem by offering long-term security and the flexibility that comes with having no ERCs.”

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Ray Boulger, senior technical manager for John Charcol, said: “This is clever product design and it gives good value, but I think it’s the wrong time to fix into a long-term deal because we are at the top of the rate cycle. You still have to look at it as a long-term deal on the basis the fee is effectively refunded if the borrower stays for 10 years.”