A fixed rate mortgage guarantees your interest rate for an agreed period of time, often two, five or ten years. A ten year fixed rate mortgage means that your interest rate and monthly repayments will stay the same for a decade.
On a typical 25-year term mortgage, you’ll pay the agreed rate for the first decade and then be moved onto your lender’s standard variable rate (SVR) unless you remortgage. However, it is possible to get shorter-term mortgages, and if you choose one that only lasts 10 years, then the fixed rate will apply throughout.
If you don’t want to fix your mortgage rate, you can opt for a variable rate that tracks a financial indicator, usually the Bank of England base rate. These typically start cheaper than fixes, but your payments go up and down when the indicator does. That means if interest rates rise sharply, you’ll end up paying lots more. On the other hand, people on variable mortgages benefit when rates fall, while those with fixed options start to pay over the odds.
Fixed rates are suitable for people who like certainty and are prepared to pay extra to know what they need to repay exactly. Longer fixes often mean higher interest rates, but you have more peace of mind.
Rates vary depending on who you borrow from, so it’s important to use comparison tables like the one above to ensure you secure the best 10 year fixed mortgage.
Lenders set their own rates based on several external factors. These include what they think will happen to the Bank of England base rate, the price of UK gilts, the type of customers they want to attract and competition in the market.
Other key considerations include the cost of regulation, capital and liquidity requirements, default rates and administration and marketing expenses.Not every borrower will be offered the same rate. Lenders make decisions based on the size of your deposit and loan-to-value rate, your credit history, and the type of mortgage you choose.
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Choosing whether or not to fix is a personal decision that will depend on your risk appetite, personal circumstances and need for certainty. Variable rates can be cheaper, but costs go up and down, so you need flexibility in your budget in case repayments rise. If your budget is tight, you could be at significant risk of not being able to pay what’s owed. In extreme circumstances, you could lose your home.
Fixing is often more expensive, but you know what you have to pay for the length of the deal. Longer fixes offer more certainty, but you’ll lose out if rates fall. You could also save substantially if they continue to rise.A 10 year fixed rate mortgage might appeal if you would like the security of knowing you could afford your mortgage for the next decade. If you decide to apply for a 10 year fixed rate deal, the mortgage provider then looks at your finances to determine if you can afford it.
If you’re planning to move soon, make sure any fix allows you to port your mortgage (take it with you). Otherwise, you could be stung by hefty repayment fees.
Fixes the interest rate for 10 years
Ensures monthly repayments stay the same
Protects against Bank of England base rate rises
Guards against your lender changing its standard variable rate (SVR)
Makes long-term budgeting is easier
You often pay higher interest rates than other mortgage types
If rates fall, you’ll be locked into a more expensive mortgage
It’s unlikely to be the best deal if you plan to move home
Expensive charges if you want to switch to a new deal
If you want to move house before your fixed-rate ends, you’ll need to see whether the provider will let you do something called “porting”. This is when you transfer the mortgage to your new home.
If you’re not allowed to do this, you can face early repayment charges, usually between 1% and 5% of the outstanding mortgage. If you owed £150,000, changing your mortgage would cost £1,500–£7,500 in fees.
Even if you can port, there are drawbacks. If you’re moving up the property ladder, you’ll have to borrow the extra cash from your existing lender – this might force you to take a less favourable deal.
You’ll also often need your exchange to be simultaneous, with no gap between the sale of your old house and the completion on the new one. Some lenders will let you sell first and then reclaim the early repayment fee if you buy within 90 days. This is a high-risk strategy because missing the deadline is costly.
Think carefully about your financial circumstances and whether they have changed. You need to prove you can still meet the lender’s criteria when you port, so you might struggle to get the deal if your income has fallen.
Check to see what deals are available on the market. If you can find a significantly lower interest rate, you might be able to save more than the repayment fee overall.
You could get a shorter-term fixed-rate mortgage if ten years is too long. If you want a cheaper mortgage, a shorter length could work out better. You can compare all fixed mortgages here.
The shortest fixed rates currently available on the market last for two years. These tend to be the cheapest fixed rates, but the certainty is short-lived. They’re ideal if you want to fix but are planning to move in the near future, or if you think rates will drop, but don’t want to risk a variable rate mortgage.
If you want a bit more certainty but want to keep repayments low, a five-year fix might be more suitable for your needs. These mortgages are slightly more expensive rates wise but may suit people who want to set costs over the medium term to help them budget.
A lifetime fixed rate mortgage lets you lock in interest rates for the loan’s entire lifetime (until you have paid it off). These are the ultimate choice for certainty, as you know exactly what your repayments will be, but they’re often very expensive. If you want this sort of security, make sure you have the biggest deposit you can manage to attract the best deals.
You don’t need a massive deposit for a 10 year fixed rate mortgage, but the bigger it is, the better deals you’ll have. Saving up for a deposit for longer can bring your interest payments down significantly, and since longer fixes typically charge more, this can tip the balance on whether a ten-year fix is a good idea.Generally, the qualifying criteria for a 10 year fixed rate mortgage are the same as any other mortgage. However, some lenders may request that you have a deposit of at least 15% to 20%, while others want you to have 40% set aside. You can sort the comparison table above by required LTV to see what’s available.
Locking in a fixed-rate mortgage while interest rates are low can help keep your mortgage payments down and consistent over the next few years. Do your research to find the right deal for you. ”Nisha Vaidya, Mortgage Editor
This will depend on your risk appetite and how much you value certainty. A variable rate might be cheaper, but if interest rates go up, so will your repayments. Fixed rates are less attractive, but you know what you will owe for each month of the deal.
Once your mortgage deal has finished, your lender will move you to its standard variable rate (SVR). This rate is rarely the best available, so you should consider switching to a new deal as soon as possible. You can opt to switch to either a fixed or variable rate.
Yes, but you will usually have to pay an early repayment charge, which can cost thousands of pounds. Most lenders say you can overpay 10% of the outstanding debt each year, but rules vary.
It’s impossible to predict mortgage rates. The Bank of England base rate has risen already in 2022, and variable mortgage rates will increase accordingly. Many experts expect further hikes, but any rises will depend on what happens to the UK economy and inflation. Wider geopolitics will also influence rates, whether that’s the Covid-19 pandemic or the war in Ukraine.
Yes, there are a number of buy-to-let mortgage deals that allow you to fix your rate and monthly repayments for 10 years. These are usually also available for two and five years.
Yes, every application for credit you make appears on your record. If you have lots of applications, this makes lenders nervous and can decrease your score. Avoid making too many applications over a short period - if one lender says no, wait a few months before your next application. Where you can, use soft searches to see what you might qualify for without impacting your score. Here is how your credit history works.
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