10-Year Fixed Mortgage Rates
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Written by:
Alison Gibson
Ascot Mortgage Expert
Last Updated:
06.10.2023
Written by:
Alison Gibson
Ascot Mortgage Expert
Last Updated:
06.10.2023
A mortgage is perhaps the most significant financial commitment one might make during their lifetime. Choosing the right one can be quite a challenge, especially with the myriad of options available. One option that’s steadily gaining attention is the ten-year fixed-rate mortgage. Let’s delve deeper into this long-term mortgage option and discuss why it might be an ideal solution for some homeowners, especially considering factors like deposit requirements and how to apply.
What's a 10-year fixed mortgage rate?
A 10-year fixed mortgage rate refers to a mortgage deal where the interest rate remains constant for a period of ten years, irrespective of fluctuations in the economy or base rate adjustments by the Bank of England. In simple terms, the lender fixes the interest rate you pay on your mortgage for a decade. This means your monthly repayments are set and won’t change over this period, providing you with security and the ability to plan your finances with certainty. To apply, prospective homeowners must often meet specific deposit requirements set by the lender.
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What are the benefits?
Opting for a 10-year fixed-mortgage deal can come with numerous benefits.
- Firstly, you’re safeguarded from interest rate hikes for a decade. In times of economic uncertainty, this can provide immense peace of mind.
- Secondly, it offers long-term budgeting security. As your repayment remains unchanged, you can plan your finances more accurately without fearing sudden jumps in mortgage repayments.
- Thirdly, some lenders may offer a lower interest rate for a longer-term fixed rate mortgage if you apply with a larger deposit, which can save you money over the term of the loan.
What are the downsides?
However, a ten-year fixed-rate mortgage is not without its cons. For instance, while you’re protected from rate hikes, you also won’t benefit if interest rates drop. Moreover, if you decide to move house or pay off your mortgage within the ten-year period, you may face substantial early repayment charges, depending on the deposit and application terms you initially agreed to.
What fees are there if I decide to move?
If you plan to move house before the end of your 10-year mortgage term, you may have to pay an early repayment charge (ERC). This fee is often a percentage of the outstanding loan and can be quite hefty. However, some lenders offer ‘portable’ mortgages, which allow you to transfer your mortgage to a new property, though this often requires a new application process and the property must meet the lender’s criteria.
What happens at the end of my 10-year mortgage term?
When your ten-year period ends, your lender will usually switch you to its standard variable rate (SVR). This rate is typically higher than the fixed-rate you had been paying, leading to an increase in your monthly repayments. At this point, you might want to consider remortgaging to a new fixed-rate deal to maintain budgeting certainty.
Should I opt for a 10-year fixed-rate mortgage?
Choosing a mortgage is a personal decision and depends on your circumstances, financial stability, and future plans, including deposit considerations. If you crave long-term security, don’t intend to move, and can afford the potential early repayment charges, a 10-year fixed-rate mortgage could be a suitable choice. Applying involves a careful evaluation of various factors.
Speaking to a mortgage broker can provide invaluable advice, tailored to your individual circumstances. We can help guide you through the pros and cons, find the most competitive rates, and ensure that the mortgage you choose aligns with your long-term financial goals, including how to apply and meet deposit requirements.
We, at Ascot Mortgages, are more than happy to delve deeper into this type of mortgage and find the best option for you. Our team of experienced advisors is committed to helping you navigate the complexities of the mortgage market, including the application process and deposit considerations, and will guide you every step of the way towards finding a mortgage that best suits your needs.
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FAQ
Yes, typically there are Early Repayment Charges (ERCs) if you choose to pay off your 10-year fixed-rate mortgage within the fixed term. These charges can be substantial, often calculated as a percentage of the outstanding mortgage balance. The specific amount and details about ERCs will be laid out in your mortgage agreement. It’s always important to consult your mortgage advisor or lender about the potential cost before deciding to repay your mortgage early.
Yes, many lenders allow overpayments on your mortgage, which can help reduce the principal and the total amount of interest paid over the term of the loan. However, there’s typically a limit on how much extra you can pay each year without incurring an Early Repayment Charge. This limit varies by lender, but it’s often around 10% of the outstanding loan balance per year. Check your mortgage agreement for details or consult with your lender or mortgage advisor.
When the 10-year fixed-rate term ends, your mortgage will typically revert to the lender’s standard variable rate (SVR) re-mortgage or obtain a product switch with the same lender. If you want to continue with a fixed-rate, you’ll likely need to remortgage to a new fixed-rate deal. You could choose another 10-year term or opt for a different term length depending on your circumstances and the deals available at the time. It’s always beneficial to seek advice from a mortgage advisor a few months before your current term ends to explore your options.
Interest rates are usually determined by the lender based on various factors, including the Bank of England base rate, the lender’s funding costs, and wider economic conditions, and are typically non-negotiable. However, you can potentially secure a better interest rate by improving your credit score, increasing your deposit, or choosing a mortgage product that better fits your circumstances. Each lender has different mortgage products and rates, so it’s beneficial to shop around or use a mortgage advisor to find the best deal for your situation.
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Ascot Mortgages authorised and regulated by the Financial Conduct Authority and can be found on the FCA register (www.fca.org.uk) under reference 776062. The FCA do not regulate some forms of mortgages. The guidance and advice contained in this website is subject to UK regulatory regime and is therefore restricted to consumers based in the UK. There may be a fee for mortgage advice. The precise amount will depend upon your circumstances but we estimate it will be £599 per mortgage account. Ascot Mortgages Ltd give you the option to pay a non-refundable fee of £1299 payable with the application. If this option is taken, Ascot Mortgages Ltd will refund any procuration fee received by the lender.
Ascot Mortgages Limited is registered in England and Wales and have their registered office at 8 Webster Court, Westbrook, Warrington, WA5 8WD. The company’s registration number is 06764971.
We are a credit broker, not a lender. We work with the whole of the lending market. We may receive commissions that will vary depending on the lender, product, or other permissible factors. The nature any commissions model will be confirmed to you before you proceed.
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