Nationwide to relaunch 25-year fixed-rate loan

Updated 17.27 Thu Jul 12 2007

Keywords: 25-year, Mortgage, Nationwide, loan

Nationwide, Britain's biggest building society, has announced plans to reintroduce its 25-year fixed-rate loan.

Earlier this year, an initial offering of the loan sold out within five weeks. Nationwide said they had always planned to re-launch the product.

Earlier this year an initial offering of the loan sold out within five weeks

The building society's announcement comes the day after Prime Minister Gordon Brown pledged the introduction of measures to help mortgage lenders finance "more affordable" long-term home loans.

Nationwide will charge an interest rate of between 6.39 per cent and 6.80 per cent for the loan, depending on whether borrowers are new customers and whether they remortgage or move house.

There is a redemption penalty of 3 per cent on the total amount borrowed during the first ten years of the loan for those who want to pay off their mortgage early.

Moneysupermarket.com's head of mortgage services, Louise Cuming, criticised the ten-year tie-in saying: "Ten years is a long time to tie in to a loan. Anything could happen. You are tying yourself into a deal that costs a lot of money to come out of if you change your mind."

The mortgage is portable, meaning borrowers do not need to change it if they move home. They can also increase the amount borrowed during the period.

Nationwide's deal, which will be available from July 17, comes with a £599 arrangement fee for new customers and £499 for existing customers.