Last updated: 15/11/2023 | Estimated Reading Time: 3 minutes
10 year fixed rate mortgages
After disappearing from the market after the financial crisis of 2008, 10 year fixed rate mortgages are back.
So could you benefit from fixing your mortgages interest rate for 10 years? Find out by reading our guide.
In This Guide:
- What is a 10 year fixed rate mortgage?
- Will I benefit from a 10 year fixed rate mortgage plan?
- Downsides to 10 year fixed rate mortgages
- Alternatives to 10 year fixes
- Compare fixed rate mortgages online
What is a 10 year fixed rate mortgage?
Fairly simply, with a 10 year fixed rate mortgage, you will pay back the value of the loan plus interest at a rate that will stay the same for a 10 year period.
This allows a certain level of financial security and allows you to budget far into the future, knowing that your monthly mortgage repayments will not change for 10 years.
Currently, after a several year hiatus during with 10 year fixes were simply not available, interest rates are, as of early 2015, at a record low.
The big question is whether or not having a set rate for the next decade will mean you are always getting a good deal. Should interest rates drop, you’ll be stuck paying over the odds. However if they carry on going up, you can sit happy in the knowledge that yours will not.
Will I benefit from a 10 year fixed rate mortgage plan?
Whether or not a 10 year fixed rate mortgage is a good deal will depend on the financial climate at the time of purchase and predictions for the future.
The future of the economy is always somewhat uncertain but if you speak to a financial advisor or simply pay close attention to the Bank of England’s monthly reports on interest rates, you can get a rough idea of how things are going to go.
The security of a decade long fixed rate is incredibly attractive to many, particularly when the rate offered is at least at the time competitive.
You can budget long into the future and not have to worry about fluctuating rates potentially increasing your monthly outgoings in a manner that you have no control over whatsoever.
Downsides to 10 year fixed rate mortgages
The obvious downside to fixing your interest rate for a decade is that at some point in the next ten years, interest rates could easily drop and you’d be left paying over the odds.
If there is another financial crash for example, those with tracker or variable rate mortgageswill be paying far less than you would be.
If this does happen you’ll have the option of switching to a different mortgage plan but you’ll be landed with potentially hefty early exit fees if you choose to do so.
Alternatives to 10 year fixes
If you want the security of a fixed rate mortgage but don’t fancy banking on the rate you’re offered being competitive for a whole decade, then you could instead opt for a two, three, four or five year fix.
Shorter term fixes are arguably less of a risk but there is always the chance that at the end of the term, rates have gone up and you could end up paying more in the long run than you would have if you went in for a longer, 10 year term.
You could also go for a tracker or variable rate mortgage, with rates fluctuating more or less in line with the country’s economic growth, though these both carry the risk of leaving you paying inflated interest rates should the Bank of England raise the base rate more than expected.
Compare fixed rate mortgages online
Whatever length of fix you’re after, you should make sure you’re comparing mortgages online. Use our mortgage comparison tool to find out how much you could be saving with the best fixed rate plans on the market at the moment.
You could even compare the best fixed rate deals with the best variable rate plans to see what the best option is for you.