Best 10-year fixed rate mortgages

Find a 10-year fixed rate mortgage and lock in your interest rate for a decade.

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In the aftermath of the 2008 financial crisis, interest rates fell to historical lows and the 10-year fixed rate mortgage went extinct for a few years.

However, in 2014, interest rates started to tick upwards, leading to a shift towards lenders offering longer fixed term mortgages to attract borrowers looking to fix their interest rates before the next rate hike by the Bank of England (BOE).

Find out whether locking in your interest rate for the next decade is right for you.

How does a 10-year fixed rate mortgage work?

Each month, the BOE sets the base rate, which is the interest rate set by the BOE for lending to other banks, and it is generally used as the benchmark for interest rates. This, as well as other economic factors, can have a bearing on what your lender decides to do with its mortgage rates.

If the rates go down, those with variable rate loans could see their repayments go down too; however, if rates go up, variable rate borrowers could be paying more. A fixed rate mortgage protects borrowers against rising rates. You lock in a rate with your lender, and then for the duration of that term, your rate stays the same.

A 10-year fixed rate mortgage means that the interest rate you pay on your mortgage will be fixed for the duration of the 10-year term. These are useful for those who want to have certainty on their monthly repayments and plan to live in the property they buy for a lengthy period and have no plans to sell or move.

Unfortunately, a side effect of this is that a fixed rate mortgage is less flexible and has extra fees compared to its variable rate cousin. In the case of long-term fixed mortgages, there are drawbacks. For starters, most lenders that offer 10-year fixed mortgages require a larger deposit, up to 50% of the property value. At the same time, the longer the term of the fixed period, the higher the interest rates and fees will be. This means your repayments may be more than someone with a two-year or three-year fixed rate mortgage.

They’ll also usually be missing features like 100% offset accounts. If they allow you to make additional repayments, these will usually be capped off at 10% of your mortgage balance annually, rather than unlimited like most variable rate mortgages.

What is an offset account?

An offset account works by using your savings to reduce the amount of your debt – and therefore the amount you’re paying interest on. If you link another account to your mortgage account, your mortgage balance will be reduced by the amount in the linked account, and you won’t pay interest on that amount. You can even continue to use the linked account to make withdrawals and deposits.

For example, let’s say you have a £250,000 mortgage with £10,000 sitting in an offset account. Instead of being charged interest on £250,000, your interest would be calculated on £240,000.

What types of 10-year fixed rate mortgages are available?

Fixed rate mortgages come in a variety of different types, each designed for people with particular needs, such as for people who are self-employed or who have bad credit. However, these may charge higher interest rates, so it’s always important to shop around to find the best deal.

Basic mortgages

This is your generic, structured process for financing a home. You get a mortgage for a set term, at an interest rate which is fixed for a certain period, and lenders require a down payment, which is usually between 5% and 20% of the property value.

Bad credit mortgages

Having bad credit can make getting a mortgage a difficult and stressful process. Luckily, many mortgage providers offer special mortgages for those with bad credit. You may be charged a higher rate or fee with this type of mortgage to compensate for your credit risk, but it doesn’t disqualify you from getting a mortgage.

Loans for the self-employed

Those who are self-employed or are investors are generally unable to provide proof of income through pay slips and bank statements like most people. Instead, self-employed borrowers will have to provide lenders form SA302, which is how you declare the amount of money you’ve earned to HMRC. This is why many lenders have special mortgages designed for those who are self-employed.

How to compare 10-year fixed rate mortgages

A 10-year fixed rate mortgage can be compared using the same factors as a regular mortgage, but there are a few additional points to consider.

  • Rate. The interest rate isn’t always the most important indication of whether a 10-year fixed rate mortgage is the best choice for you, but it will have a large bearing on how expensive your repayments will be. Also, keep in mind that the advertised interest rate will not take fees into account, so take a look at the comparison rate too.
  • Ability to make additional repayments. This won’t be important for all borrowers, but keep in mind that not all fixed rate mortgages will allow you to make additional repayments. The ones that do may come with an annual limit, so if you think you’ll be making additional repayments during the year, ensure that your loan will allow you to do this.
  • Fees. Compare the establishment, valuation, legal and other upfront costs when comparing 10-year fixed rate mortgages.
  • Other features. These may be important depending on what you plan to do with your mortgage. If your lender offers an interest-only repayment option, make sure you pay attention to the maximum length of the interest-only period. If your mortgage allows offset accounts, make sure to find out whether the offset account is a 100% or a partial offset account. You’ll also need to pay attention to what repayment options the lender will give you.

Case Study: Dennis and Kathy

 couple wants to buy house
Dennis and Kathy are both retired and looking to downsize from their four bedroom house to a ground floor flat, and use some of the proceeds from the sale of their current house to travel. They don’t plan on moving again and want a simple hassle-free mortgage that locks in their monthly payments and doesn’t require them to remortgage every few years.

Dennis and Kathy opted for a 10-year fixed mortgage.

Why:

  • Interest rate. They won’t have to worry about interest rate hikes and will know what their monthly repayment will be for the next decade.
  • No remortgage costs. Not only will it save them the headaches of remortgaging every few years, but they will also save on all the associated fees.
  • Long-term plan. They don’t plan on moving again, so there’s no need to worry about exit fees or early payment fees.

Pros and cons of a 10-year fixed rate mortgage

Pros

  • Consistent repayments. With a 10-year fixed rate mortgage, you can benefit from the security of having consistent repayments, which means you don’t have to worry about interest rate rises.
  • Additional repayments. Many fixed rate mortgages today still allow you to make extra payments, although these may be limited to a set percentage of your outstanding balance.
  • Save on fees. With your interest rate locked in, you won’t have to remortgage every couple of years, so you can save hundreds of pounds on remortgaging fees.

Cons

  • Interest rate drop. If lenders start dropping interest rates, your rate will stay the same, meaning you won’t be able to benefit from making lower repayments.
  • Discharge fees. If you have to sell your property or pay off your mortgage early, you’ll likely have to pay hefty fees.
  • Larger deposit. Most lenders require larger deposits (up to 50%) for long-term fixed rate mortgages.
  • Higher interest rates. The longer the fixed term of the mortgage, the higher your interest rate will be compared to the more common two-year fixed mortgages.

Frequently asked questions about 10-year fixed rate mortgages

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