Perenna is thrilled to announce that we have been crowned the Banking Innovation Newcomer in the Finder’s Banking Innovation Awards 2023. 

We are committed to pushing the boundaries of innovation in banking, and this award confirms our dedication to transforming the mortgage industry. 

As we work hard to build a nation of happy homeowners, we are delighted to share this exciting news.

Thank you for your continued support and for helping us lead the way in innovation in finance. 

Correct at time of publishing.

Embracing longer terms 

Taking the first step on to the property ladder can often be hard for first-time buyers. Many people now choose mortgages lasting 35 years or more. This change shows the need for new solutions to make home buying easier, especially for those starting on the property ladder. 

Financial impact explained 

When you extend the time to repay your mortgage, you can pay less each month. This is shown below. If you borrow £200,000 with an interest rate of 5.5%: 

[source – https://www.landc.co.uk/calculators/how-much-will-my-mortgage-cost/] 

 This means if you choose a 40-year term instead of a 25-year term you pay £196 less every month. Or £2,352 less each year.  

But, it’s important to know that the total interest you pay increases by £126,687. 

Borrowing potential 

Extending your mortgage period may cut monthly payments, but it doesn’t automatically boost how much you can borrow. If your fixed rate is set for a short amount of time, lenders aren’t sure of the rate you’ll be paying in the future. So, they need to stress test to work out how much customers can afford to borrow. You can learn more about this here. 

Our approach 

Our mortgage is unique. It fixes your interest rate for the full term. This means you’ll never have to worry about rates rising. Plus, our mortgage can fit around your life. You can take your mortgage with you when you move home. And after five years, if you’d like to change your mortgage deal – no problem. You can move to another lender or product without charge.  

Could you borrow more with Perenna? 

We will also lend up to six times a borrowers’ income, subject to criteria. This could help many first-time buyers who struggle with affordability. 

So why not use our calculator to find out how much you may be able to borrow? It’s completely confidential, does not affect your credit score and should only take a few minutes. 

You could lose your home if you don’t keep up your mortgage repayments.

Correct at time of publishing.

We have launched the “highest affordability” ¹ mortgage in the market to first-time buyers.

We’ve officially opened up our flexible long-term fixed rate product to new purchase customers and first-time buyers, within our pilot to selected borrowers.

We will lend up to 95% LTV, with fixed-rate terms up to 40 years, helping borrowers lower their monthly payment amount. We will also lend up to six times a borrowers’ income, subject to criteria, which could act as a significant lending boost for many first-time buyers who consistently struggle with affordability.  

A longer fixed rate term allows many borrowers a higher affordability boost compared to those on a short-term fixed rate mortgage. This is because of the way current mortgage products are designed which place all the market risk on borrowers. Once this is removed, through fixing the rate for the entire term, first time buyers could borrow more. This is the innovation we offer. 

For example, on a £60k joint income, a first-time buyer could borrow up to £355k with us, which is about £70k more than the closest high street lender.2

This could make a massive difference for first time buyers. As a result, borrowers looking to maximise their borrowing responsibly should consider a longer-term fix compared to a shorter-term fix like a 2 year or 5-year fixed rate mortgage.  

 The product also only carries declining early repayment charges (ERCs) for the first five years, making it highly flexible. This gives borrowers certainty that their payments will never increase, as well as allowing them to change when the time is right for them. 

Colin Bell, COO & Co-Founder of Perenna comments:  

“We’re really excited to open up the Perenna Mortgage to first time buyers and new purchase customers. First time buyers are constantly struggling to get onto the housing ladder due to affordability issues – whether that’s saving up enough for a small deposit or being able to borrow enough to afford a home they really want. The Perenna Mortgage is the complete mortgage product – increased affordability combined with long-term stability and flexibility.” 

Arjan Verbeek, CEO & Co-Founder of Perenna comments: 

“We believe in unlocking the power of homeownership without having to sacrifice the amount you can borrow – borrowers should be able to have both their cake and eat it. As we remove market risk from borrowers, customers can borrow what they actually can afford, which in some cases can be on average up to 30% higher than the high street lenders.3 With our full unrestricted UK banking license and recent funding round, we are ready to deliver the much-needed changes in the UK mortgage market, and start delivering better outcomes for homeowners across the country.” 

How much can you borrow?

Want to find out if Perenna could help you? Why not use our calculator to find out how much you could borrow? It’s completely confidential, does not affect your credit score and should only take a few minutes. If you’re eligible to apply, the quote will also let you know how to access a Perenna mortgage.

You could lose your home if you don’t keep up your mortgage repayments.

Notes:

• Footnote 1 – “Highest affordability” defined as highest borrowing amount by use of intermediary mortgage affordability calculators across leading high street lenders2, as at 13 November 2023 
• Footnote 2 – “Leading high street lenders” defined as those who control 75% of the market by gross lending during 2022 – MM10, UK Finance (as at 13 July 2023) 
• Footnote 2 – “Leading high street lenders” defined as – HSBC, Natwest, Nationwide, Santander, Virgin Money, Lloyds Banking Group, Barclays 
• Footnote 3 – Data chart, see below, as at 13 November 2023:

All information correct at time of publication

Getting your foot on the property ladder is a huge milestone in most people’s lives. It’s an exciting time but can be equally as daunting.

Firstly, there’s the thrill of finding your first home. And then there’s the realisation that you’re probably making the biggest commitment of your life.

So, how do you know that you’re making the right decision? Of course, that depends on what matters to you and your own situation. But, here at Perenna, we think we have the perfect combination for First Time Buyers. Stability with flexibility.

The search for stability

When thinking about buying your first home, stability is important. Whether you’re thinking about money, home location or simply how this could affect your future, having a stable outlook can be very reassuring.

That’s where we come in.

We think people are happiest when they aren’t worrying about money. That means less focus on rising interest rates and high energy bills. And more focus on enjoying your home and living your life.  That’s why we offer long-term fixed rate mortgages. By fixing your rate for the full mortgage term, you’ll know exactly what you must pay each month. No teaser rates, no rising payments, no shocks.

Flexibility as standard

Plus, our mortgages are designed to fit around your life. That’s why you can:

• Take your mortgage with you when you move home
• Change your mortgage to another lender or product without charge, after 5 years

How much can you borrow?

Want to find out if Perenna could help you? Why not use our calculator to find out how much you could borrow? It’s completely confidential, does not affect your credit score and should only take a few minutes.

You could lose your home if you don’t keep up your mortgage repayments.

Correct at time of publishing.

Will your age stop you from getting a mortgage? 

Growing older is part of life.  And often, with age, financial security becomes more important than ever.  

For many of us, owning a home is a huge part of that security. And for most people, that means getting a mortgage.  

However, as retirement approaches, homeowners in the UK may find themselves in a tricky situation if they want access to a mortgage. Often the options on offer to them are limited.  

You may have read stories about people who aren’t able to shop around or get a mortgage at all, simply due to their age.  Retirement should be a time to relax and enjoy life away from the pressures of the daily grind. And yet, many may find themselves worrying about their home. 

So why is this?  

Many lenders have an end of term age limit which restricts mortgage options. Look at the example below to see how. 

Borrower 

Age at time of applying: 65 years 

Mortgage term requested: 20 years  

Age at end of term: 85 years 

Many high street lenders will not offer the term asked for.  That’s because they typically have a maximum age of 75-80 years at the end of term¹.

So why can having a mortgage in later life be important?

There are many reasons why people want a mortgage into retirement. It could be to support their lifestyle or to pay for home improvements. Or for some, it’s simply to allow them to stay in the home they love.  

Here are a few examples to bring this to life.

Example 1 

Ann wants to extend her mortgage term so she can reduce her monthly mortgage payments.  

Ann is 65 and has 10 years left on her mortgage. She has a pension income of £25k. She is currently on a standard variable rate of 7.99%.    

Her priority is to have more disposable income. She does not want to have to cut down on things at this stage in her life.   

Example 2 

John and Beth want to pay down their debt as soon as possible. 

John, 54, and Beth, 52 are on an interest only mortgage, with no repayment plan. Their joint income is £80k.    

They don’t want to downsize as they love their property and location. They are looking at a capital & interest repayment product. They would like to keep their monthly payments low. 

Example 3 

Melanie has recently separated from her partner and needs a mortgage that helps her meet affordability requirements. 

Melanie is 56. She is a nurse with an income of £45k.  

Her priority is to remove her partner from the mortgage and avoid having to sell the family home and downsize.   

As the mortgage will rely on her income alone, affordability as well as end of term age limits are stumbling blocks for her.  

How can Perenna help? 

Here at Perenna, we want to help homeowners make the most of their retirement. And for us, age is just a number. That’s why we’ve removed age limits. Instead, we assess mortgage applications on property value and whether the monthly payments are affordable (maximum loan to value limits may apply). This could make a huge difference for each of the examples above. It could be the difference between the borrower achieving their goals and not.  

Want to find out if Perenna could help you? Why not use our calculator to find out how much you could borrow? It’s completely confidential, does not affect your credit score and should only take a few minutes. 

You could lose your home if you don’t keep up your mortgage repayments.

¹Maximum age at the end of the mortgage term (Repayment mortgage examples)  

Nationwide – 75 years old – https://www.nationwide-intermediary.co.uk/lending-criteria/general#max
Halifax – 80 years old https://www.halifax-intermediaries.co.uk/criteria.html;
HSBC – 80 years old https://intermediaries.hsbc.co.uk/criteria   

Information correct as at 16 October 2023 

Correct at time of publishing.

Shining a light on the impact SVR has on affordability

When comparing mortgages, do you focus on the headline rate?

If you do, you’re not alone. But, by looking at the ‘teaser’ rate of a short-term fixed rate (typically between 2 and 5 years), you may be missing the bigger picture. Did you know that the amount you can borrow isn’t usually based on that headline rate? The rate that is actually important in working out how much you can borrow is usually the rate you are charged after the fixed rate period ends. This is known as the ‘reversion rate’. You’ll often see it referred to as ‘standard variable rate’ or SVR.

So, let’s talk more about that…

Standard Variable Rate (SVR)

Fixed rates are a popular mortgage choice. But, when you choose to fix your rate over a shorter-term, you should take note of what happens after the fixed rate ends. The product usually defaults to a higher rate. You may see this next rate referred to as:

• Standard Variable Rate (SVR)
• Follow on rate
• Reversion rate
• Lender’s standard rate

This rate can change at any time and is set by the lender.

The reason this rate is so important is because lenders are required to use it when working out how much customers can afford to borrow.

They use this rate to estimate how much your monthly payments would go up by and check that you can afford it. Additionally, in the UK, lenders must check if you can still afford the mortgage amount you have asked for by calculating your payments using a rate that is at least 1% higher than their current reversion rate. This is called stress testing. Sounds complicated? Don’t worry, let us simplify this for you.

A quick example of how this affects the amount you could borrow

• The ’teaser’ rate on a 2-year fixed product is 5.50%
• The SVR is 8.0%
• The lender will assess whether you can afford monthly payments at a rate of 9.0%

So, in this example, you may be able to afford the monthly repayments at 5.50%. But, to ensure they’re lending responsibly, the lender checks your affordability at 9.0%. This could reduce the amount you can borrow.

Let’s help you to understand by using example numbers. We’ll look at a mortgage of £200,000 over 30 years:

In this scenario, the monthly payment during the fixed rate would be £1,136. But, the lender would need to check that you can afford monthly payments of at least £1,609. That’s £473 more!

Please note, all figures used above are for illustrative purposes only. All information correct at time of publication.

Check how much you could borrow with Perenna

At Perenna, the rate is fixed for the whole term. It doesn’t change to a variable rate. This means we don’t need to stress test your payments. We know exactly what you’ll need to pay each month.

Why not use our calculator to find out how much you may be able to borrow? It’s completely confidential, does not affect your credit score and should only take a few minutes.

You could lose your home if you don’t keep up your mortgage repayments.

The subject of mortgages can be confusing. There are so many on offer and it may be hard to know what’s right for you.

A popular choice is a fixed rate mortgage. This means your monthly payments are guaranteed for a set amount of time. If you like the idea of a fixed rate mortgage, then you have a decision to make. How long do you want to fix your payment for? Of course, there are different options available in the market. You can choose to fix the rate over a shorter term (usually between 2 and 5 years) or a longer term (which could be up to 40 years).

In the UK, there aren’t many longer-term fixed rates out there. We’re changing that with the Perenna mortgage.

Like with anything new, we know it can take time to feel comfortable with a new offering. We appreciate that not everyone fully understands how long-term fixed rates can benefit them. So, we think it’s time to shine a light on some of the myths we’ve come across and show how Perenna’s innovative product can address these. Here are just some of the comments we’ve come across…

Myth 1: They’re not flexible

We say:
Typically, longer term fixed rates offered in the UK have not given borrowers the flexibility they may want. Ten-year fixed rates may come with long early repayment charges which can restrict borrowers.

However, a Perenna mortgage is different. Our product combines long term stability with flexibility. You’ll know exactly what you must pay each month for your whole mortgage term. No teaser rates, no rising payments, no shocks.

Plus, our mortgages are designed to fit around your life. That’s why you can take your mortgage with you when you move home or change your mortgage to another lender or product without charge, after 5 years.

Myth 2: Not many people are interested

We say:
Thousands of people on our waitlist have shown that they are interested. Plus, millions of people across US and Europe already benefit from products like this.

So, why shouldn’t these mortgages work in the UK? Our mortgages have been designed to help:

• first-time buyers looking to borrow a little bit more
• homeowners seeking stability when remortgaging
• later life borrowers wanting to release equity from their property

Myth 3: They’re expensive

We say:
You can’t compare apples and oranges.

Whilst a Perenna mortgage may have a higher rate than some other ‘teaser’ rates on offer, you need to think about how they may compare longer term. For example, if you’re thinking about fixing your rate over a short term, you’ll need to consider what happens when that deal comes to an end. Will you be able to afford a new mortgage if rates rise or your circumstances change? We want to remove this risk.

We don’t think homeowners should have to worry about rates changing or being denied access to mortgage products in the future. That’s where a Perenna mortgage comes in. By fixing your rate for up to 40 years, you’ll know exactly what you must pay each month for your whole mortgage. Can you put a price on peace of mind?

Myth 4: Rates will come down so no need to fix for longer

We say:
Everyone loves a good deal. But is it wise to hazard a guess on what could be your biggest financial decision? Instead of trying to predict the future, you will know exactly what you’ll pay each month with a Perenna mortgage. This puts you back in control of your finances so that you can plan for your future.

Yes, rates could come down, or your circumstances could change. And that’s why our product comes with flexibility as standard. If you want to change, that’s no problem. You can do so without charge after 5 years.

Could a Perenna mortgage be for you?

If you’d like to find out how much you could borrow, why not use our mortgage calculator. It’s completely confidential, does not affect your credit score and should only take a few minutes.

You could lose your home if you don’t keep up your mortgage repayments.

So, you’ve decided to buy a new-build home? Whether you are a first-time buyer or an experienced mover, there are many benefits and potential pitfalls to be aware of when purchasing a newly built property.

Despite the pandemic leading to the temporary closure of the housebuilding sector, 148,630 new homes were completed in 2020 and demand for these properties has been fuelled by a real variety of reasons, including the Government’s Stamp Duty holiday and a national ‘race for space’ which emerged as many people sought to secure additional outdoor and home working space in the wake of the UK’s multiple lockdowns. These factors, along with returning interest from international property buyers and property investors helped to create a housing boom in 2021.

New-build homes are a popular option for many reasons and provide some benefits that simply aren’t available from pre-owned homes. These properties are appealing as they require minimal decoration and often come with new build guarantees. In addition, a new-build home is a blank canvas, with fresh tiling and paintwork for buyers to enjoy immediately after moving in, and energy costs are typically lower. Many buyers also like being the first owners of a property.

Consider these drawbacks

However, there are naturally also drawbacks to consider. The so-called new-build premium means that in some cases buyers can end up paying more for a newly built home than they would for an equivalent older property. Much like buying a new car, there’s also the possibility of the price of a new home falling after purchase. This ‘forecourt’ premium can therefore make it difficult for some homebuyers to get their money back if they try and sell within a couple of years of moving in. However, property prices are inherently linked to and dependant on demand. With both new builds and older properties, their value is dictated by wider market conditions and can go up as well as down.

After you’ve visited your plot and the site’s show home, many new-build developers will also let you specify certain finishings within the build – such as flooring, tiles, and kitchen cabinets etc. While customisation options are appealing, the more upgrades or bespoke fittings you opt for, the longer you may have to wait. With this increased risk of delays with an “off-plan” home, many buyers agree on a long-stop completion date with the house builder. This is where the developer agrees to pay compensation if the construction is delayed beyond a certain date.

What else should buyers look out for?

There are several other areas buyers should keep a close eye on when purchasing a new-build home. These properties typically come with a warranty, but this will usually only cover building defects and structural issues. With new-builds, you can expect snags like unfinished carpets or a missing door hinge, so be prepared to have a snagging survey as soon as the developer allows you on site.

Prospective buyers should also ensure they know whether their property is freehold or leasehold. With the latter, the owner usually pays an annual ground rent to the freeholder. Leases can be as long as 990 years but are typically between 100 and 125. Homeowners can struggle to obtain a mortgage if the lease has less than 70 years left to run. However, there have been proposed changes as Government pledges to end leaseholders’ ground rent payments to their freeholders.

If you are a leaseholder, the freeholder may attach certain conditions to your property, such as requiring that no alterations are made to the property without prior consent. However, leaseholders are fully responsible for any maintenance and building insurance costs. New-build houses should not be sold on a freehold basis, but most homes in flats are sold in this way.

Correct at time of publishing.

In the UK, we’ve traditionally had a preference for short-term fix mortgages. Luckily for consumers, changes are coming to the market – a fixed for life mortgage where the interest rate is fixed for the whole loan duration!

Here are 10 reasons why you should consider a a fixed for life mortgage.

1 Borrow what you can afford

Since the global financial crisis, it has become increasingly difficult for consumers to get on the property ladder. The United Kingdom is experiencing an affordability crisis and housing is expensive in relation to incomes. New regulation following the financial crisis requires that lenders ensure borrowers can afford their mortgage payments and apply strict affordability underwriting criteria. This protects the borrowers from higher interest rate environments but also restricts the amount that a consumer can borrow under a variable or short-term fixed-rate mortgage.

In contrast, a fixed for life mortgage offer consumers the same interest rate throughout the loan term. By fixing the interest rate, the fixed for life lender does not have to stress test borrowers for potential rate rises. As a result, certain borrowers can borrow more under a fixed for life mortgage.

2 Borrow with a smaller deposit

A mortgage is a loan secured by an asset – the house. To issue the loan, the lender has to be certain that a) the borrower can sustain paying the monthly payments throughout the lifetime of the loan and b) that the outstanding value of the loan does not exceed the value of the asset. Fixing the interest rate and locking in monthly payments years ahead enable the lender to gain more confidence in the repayment ability of the borrower. This enables lenders to issue loans on a higher LTV basis.

3 Never overpay

With a fixed for life mortgage, you never have to worry about adjusting to a standard variable rate which may be more costly. The standard variable rate is what a borrower is transferred onto when the short-term fix mortgage ends. The lender can set the rate at any level they want, meaning your monthly payments are uncertain. Some borrowers who are caught on a standard variable rate are unable to refinance their mortgage.

4 Don’t worry about remortgaging

Getting a mortgage can be a stressful undertaking. It’s not fun spending weekends looking through price comparison sites and evenings speaking to mortgage brokers. Many borrowers with short-term mortgages have to remortgage every 2nd or 5th year.

Luckily, with a fixed for life mortgage, you don’t have to worry about refinancing. Ever. Unless you want to.

5 Budget with confidence

A 30 year fixed for life mortgage brings certainty to expected spending and enables you to budget years ahead with confidence. Knowing your largest financial outgoing is certain for 30 years will help you plan for the other things that matter in life. Life is full of surprises but a fixed for life mortgage won’t be!

6 Make key life decisions without the baggage

Being free to make key life decisions is a must. Short-term fixed mortgages often come with early repayment charges, preventing borrowers to move and make big life decisions. An early repayment charge is a penalty applied if you repay your mortgage during a tie-in period. This will re-set after each remortgaging. A fixed for life mortgage will only have early repayment charges for the first 5 years. Hereby providing borrowers with 25 years freedom and flexibility to live their lives to the fullest.

7 Freedom to move with full portability

Another important flexibility component of fixed for life mortgages is porting – the ability to port your mortgage to a new property. Porting your mortgage means transferring the same mortgage deal to a different property – while keeping the same lender, interest rate, loan amount and rules. One advantage of porting a mortgage is that if you’re still in a tie-in period, you don’t have to pay any early repayment charges if you port. If you’re no longer in the tie-in period, you will also be a position to evaluate the market terms and see if there are better deals available. Win-win!

8 Protection against market changes

You can control many things in your life, but the economy, house prices, job market and government regulation are outside of most peoples control. Typically, if the housing market goes down in value close to your remortgaging date, the available products to you may be more expensive. or in some cases lenders may not lend to you at all if the loan to value is too high. In some cases, banks might not be able or willing to lend to you due to changes in rules. General rule changes are introduced for a good reason but might have unintended consequences. When the bank regulators changed the rules in 2014 to protect against the next crisis, many people could not refinance and were stuck on a high-interest rate, more largely known as mortgage prisoners.

A fixed for life mortgage is protection against uncertainty and events outside of your control. You will have full clarity of monthly payments for the next 30 years and will not be paying more if rates start to rise.

9 Borrow in retirement

Later life borrowers often have difficulty obtaining a mortgage. Mortgage lenders are wary that their pension incomes may not be sufficient to absorb interest rate rises. Therefore, lenders have limits on how old a borrower can be when they take out a loan and how old they will be when it ends. The closer the borrower is to the maximum age, the less time they will have to pay off any new mortgage.

A fixed for life mortgage is the solution. As long as the borrower can afford the fixed monthly payments, there is no concern of interest rate rises. Later life borrowers can get on with their lives and support their living costs in retirement, provide financial assistance to family members and live independently in suitable homes for as long as they are able and want to.

10 The right timing

The interest rate is at a historic low. If you’re too young or don’t remember the 80s it’s worth asking someone you know about their mortgage experiences back then. In 1985 the interest rate reached 17% and there was no certainty the rate was coming down. The world is different today. We’re facing great uncertainty about the future. This is reflected in the interest rates. A low-interest rate fixed for life mortgage looks like the perfect loan for borrowers who want financial stability and knowing how much money they will spend in years to come.

Correct at time of publishing.