What are the pros and cons of fixing a mortgage for 10 years?

What are the pros and cons of fixing a mortgage for 10 years?

19th Oct, 2018

In recent years, two-year mortgage deals have been the most popular. But with the historically low interest rates gradually rising, the sector has witnessed a shift towards longer fixes.

Deciding how long to tie yourself in for can be a tricky decision to make, so it is important to consider all of the options carefully. Here we list the advantages and disadvantages…

The pros

  • You have the security of knowing exactly how much your repayments will be for the agreed term
  • As of August this year, we saw the base rate rise from 0.5% to 0.75%, so it is likely that mortgage figures will increase as a result. Therefore, now may be the perfect time to freeze your monthly cost
  • Everyone has to pay interest on their mortgage, and the cheaper the rate you secure the less you repay back to the bank – on top of what you already owe them – so fixing for a decade could prove great value for money.

The cons

  • Fixed rate mortgages come with early repayment penalties, meaning if you want to pay the loan off early – for example, if you inherit or want to sell up – it is likely to cost you thousands of pounds
  • The security that comes with having a non-moveable rate generally proves to be more expensive than a variable-rate deal
  • By freezing your rate, you could miss out on a better deal if the cost of them falls.

It is all well and good knowing the pros and cons of this type of mortgage, but it is also crucial to consider who is purchasing the house.

If you have found your forever home – and can’t see yourself moving out within the next ten years – then the longer-fixed term is perfect for you. You can almost forget about your repayments for a decade, as you know exactly what you are paying and when – you’ll have no nasty surprises!

On the other hand, first-time buyers are not recommended to take out such a lengthy deal. This is because your first home is less likely to be one that you will spend more than 10 years in – purely for the fact most will want to climb further up the property ladder. 

So if you have any doubts, a shorter-term or a variable-rate deal may prove a more sensible choice.

If you do decide that a 10-year mortgage duration is for you, be aware that there isn’t a huge number of deals on the market – but it still pays to shop around and do your research!

If you would like any more information on this – or are simply on the hunt to purchase a property – feel free to get in touch with one of our reliable sales team.

View all posts by Laura Anne Townson


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