10 year fixed rate mortgages

10-year fixed rate mortgages are currently the longest fixed rate periods offered by banks and building societies in the UK.

Why get a 10 year fixed rate mortgage?

10-year fixed rate mortgages are the ultimate in financial security: no matter what happens to the Bank of England’s base rate, or your lender’s standard variable rate (SVR), your mortgage repayments will not change for 10 years.

In exchange for that security, though, the interest rate on a 10-year fixed rate mortgage will be a lot higher than a discount rate or shorter fixed rate mortgage. For example, the interest rate on a two-year fixed rate mortgage in March 2018 is around 1.4%; if you want a fixed rate for 10 years, the interest rate is closer to 2.5%. On a mortgage of £400,000 repaid over 25 years, the monthly repayments at 1.4% are £1600; at 2.5% it’s £1,800.

Basically, you are gambling on whether interest rates will go up by more than 1% over the next few years.

Can you get a 10 year fixed rate mortgage?

There aren’t any particularly gnarly eligibility criteria for a 10-year fixed rate mortgage. The only real thing to bear in mind is that the best interest rates will only be available if you have a large deposit (usually 30% or LTV 70%).

Locked in for 10 years

Because you’ll be locked into the same interest rate for 10 years, you should try to get the lowest interest rate possible.

Think very carefully about trying to exit a 10-year fixed rate mortgage, too. Unlike shorter fixed-rate deals, where the penalty for early repayment is quite small (2 to 3%), the early repayment charge on a 10-year fixed rate mortgage is usually between 5 and 10%. If you have a mortgage of £400,000 this would be a major chunk of change – £20,000 to £40,000.

Unless you think that interest rates will rise dramatically over the next few years, a shorter fixed rate mortgage deal might be more sensible.

Last updated: 10 January, 2019

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