Best 10 Year Fixed Rate Mortgage

10-year fixed rate mortgages explained

What is a 10-year fixed rate mortgage?

10-year fixed rate mortgages ‘freeze’ your mortgage repayments at a set figure for 10 years. This makes them popular with people who like to know exactly what they will be paying for their mortgage over a longer period, enabling them to budget effectively.

The only drawback can be that if interest rates drop during the term of your mortgage, then you may find yourself paying more than if you had been on a variable rate or shorter-term deal. On the flip side, if mortgage rates were to rise, you could end up saving money by locking yourself in.

Is it a good idea to fix my mortgage for 10 years?

The answer to this very much depends on both your own circumstances and expectations of what is likely to happen to interest rates over the next decade. Ten years is a long time and, as yet, no-one has managed to successfully predict with 100% accuracy what will happen to interest rates over such a long period.

The only solution is to make a judgement call based on what’s good for you and your budget. Having fixed mortgage payments for such a long time gives you a great deal of certainty on what your outgoings will be for the next decade – if this suits your personal circumstances then you may decide that this outweighs the possibility that rates will drop further.

However, if you’re uncertain then you might want to consider locking your rate in for a lesser period, such as a five-year mortgage, instead of the full 10. That way you’re still guaranteeing your repayments for a lengthy time period, but needn’t run the risk of rates dropping too far over a longer term.

What should I consider before fixing my mortgage for 10 years?

Your budget

The first thing you’ll need to consider is the rate, and alongside that, your budget – and whether you could afford the higher costs of a 10-year deal. Even the cheapest 10-year fixed rate mortgage will often be higher than shorter-term deals, largely because the provider is taking on more risk by lending to you over such a long time period.

Yet although repayments may be higher, you’re getting the security that they won’t change for a considerable length of time. And as our chart of the best 10-year mortgage rates shows, they’re not always that much more expensive anyway.

Consider the mortgage fees and legal costs, too. Shorter terms may be cheaper, but you’d need to factor in the additional fees when it’s time to remortgage. For example, if you opted for a two-year fixed rate mortgage, you’d have five sets of mortgage fees to pay for over the course of 10 years, whereas with a 10-year deal you’d only have to pay mortgage fees once.

Your personal circumstances

It’s also important to consider your own personal circumstances, and whether or not you’re expecting things to change dramatically in the next decade. For example, if you’re a first-time buyer in a new job and are planning on climbing both the career and property ladder in the next few years, a shorter-term deal may be more appealing as it offers a greater level of flexibility. However, if you’re starting a family and are setting down roots in your new home with no plans to move, you may prefer a longer-term deal to have more security and certainty over repayments.

Bear in mind that a 10-year deal can also help protect against uncertainty on a more general level. You won’t need to go through several application processes over the next decade, so if your circumstances changed and you’d struggle to meet the criteria, you wouldn’t lose out on a suitable mortgage deal. This also applies if lenders changed or tightened their criteria; you’d be protected from this until your term ends, by which time your circumstances may have recovered.

Your moving/overpayment plans

If you’re planning on moving home in the next few years, a 10-year deal probably isn’t for you. Even if your mortgage is portable, there could still be additional fees to pay and criteria to meet, so it could be a risky and expensive option. And if it isn’t portable, you’ll have to pay an Early Repayment Charge (ERC) to exit the deal, which could cost thousands.

Similarly, if you’re planning on making significant overpayments in the next few years, a 10-year deal may not be your best option, as you’ll normally be tied in to only making a maximum overpayment of 10% each year. In this case, shorter terms can offer more flexibility, and more scope to bring down your loan-to-value over the period.