A lot can happen in 10 years, both in your personal life and as we have seen recently, in the world economy. A greater level of financial stability is therefore one major reason to consider a 10 year fixed rate mortgage. As the name of this product would suggest, a 10 year fixed rate mortgage ensures that your interest rate will not change for an entire decade. As it is universally accepted that interest rates cannot continue to fall, it may be a prudent move to take on a 10 year fixed rate mortgage right now, because mortgage products that follow the Bank of England base rate could end up costing consumers considerably more in monthly repayments over the years to come.
One aspect of a 10 year fixed rate mortgage that you should carefully consider, however, is the fact that a lender will charge an early repayment fee during this 10 year fixed period if you choose to pay back the money early. The reason for this is that the lender would lose out on some of your interest if you choose to do this, because they are charging you interest on a smaller sum of money. However, after the 10 year fixed rate mortgage term has come to an end, you would be free to either remortgage with another provider or continue paying back your existing deal at the lender’s standard variable rate.
10 Year Fixed Rate Mortgage Key Facts
- With a 10 year fixed rate mortgage, the lender guarantees that you will be charged the same amount each month over this period. This means that you are actually repaying less of the loan at the start of the mortgage term, and more towards the end as your interest rate decreases. Look at the APR (or annual percentage rate of change) when comparing 10 year fixed rate mortgage deals. This factors in the additional costs, so forms a good basis for comparison.
- The size of the deposit you have to put down on the house will affect your 10 year fixed rate of interest. The larger your deposit, the better your interest rate, so get saving now!
- So much can happen in a 10 year period, that many people do not want to take a chance that their mortgage payments will rise considerably with interest rate changes. A 10 year fixed rate mortgage deal will ensure that your mortgage rates remain constant, even if your life changes in other ways.
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