Should I fix my mortgage for five or 10 years? - Mortgages - Guides | moneyfacts.co.uk

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Should I fix my mortgage for five or 10 years?

Category: Mortgages
Author: Leanne Macardle
Updated: 24/01/2019

At a glance:

  • Long-term mortgages are becoming increasingly popular given widespread uncertainty, with many borrowers wanting repayment security for five years or more.
  • Providers are accommodating this demand, with an increasing number of five and 10-year mortgage products available and rates edging downwards.
  • Taking out such a mortgage offers a guarantee that your mortgage rate (and therefore repayments) won't change for up to a decade, but can also equate to less flexibility than a shorter-term deal.
  • That said, many five and 10-year mortgages are now portable, allowing borrowers to move home and enjoy the same terms as their current arrangement.
The current economic and political climate means that long-term mortgages are becoming increasingly popular, with many borrowers wanting repayment security for longer than the traditional two-year mortgage – and happily, providers are accommodating. But what does it mean when you take out a five or 10-year mortgage, and should you fix your rate for that long? Here, we take a look.

What are long-term mortgages?

Long-term mortgages are exactly as they sound – mortgage deals that allow you to fix your rate (and repayments) for five or 10 years, giving you up to a decade of repayment security. Such deals can be particularly beneficial if you're concerned that interest rates will rise in the next few years, and can be ideal for those who like to budget and know exactly what their outgoings will be.

Long-term mortgages were at one stage difficult to find – and not overly popular – but in recent years they've enjoyed something of a resurgence. The number of deals available has notably increased as demand from borrowers edges upwards, and rates have fallen as well, which means fixing for the long term is getting cheaper. Given the level of uncertainty at present, it's little wonder that the popularity of such deals is on the rise, with borrowers increasingly willing to make a long-term commitment.

As may be expected, five and 10-year mortgage rates are typically higher than those on offer with more standard two-year deals, but for many, those slightly higher rates could be a more than adequate trade-off for greater security.

Pros and cons

Pros:

  • Repayment security for the long term. By fixing your mortgage for five or 10 years, you'll know exactly what your rate – and therefore your monthly repayments – will be for up to a decade. This can give valuable peace of mind that no matter what happens to interest rates in the near future, your monthly payments won't be impacted, even if rates shoot upwards.
  • At the time of writing, long-term mortgage rates are among the lowest on record, which makes now a great time to consider such deals.
  • Availability of five and 10-year mortgages is notably improving, with providers tapping into demand and offering more options.
  • Such deals are becoming increasingly flexible, too, with many offering a porting option that allows borrowers to move home and resume the mortgage on the same terms.
  • As you're not remortgaging every two years, you'll only have one fee to pay, which in itself has the potential to save thousands of pounds over the course of a decade.

Cons:

  • Your mortgage rate will typically be higher than if you took out a shorter-term deal, which means your repayments will be higher as well – at least initially.
  • There's the risk that, if rates fall in the next 10 years, you'll be locked into a deal with a higher interest rate. That said, average rates for long-term deals have fallen dramatically in recent times, and the likelihood is that rates are only going to start edging up, particularly should further base rate rises come to fruition.
  • If you want to pay off your mortgage early, you may find that your options are limited; many deals will tie you in for the full term, with high early repayment charges if you want to back out.
  • Ten years is a long time to fix, and you may find that your circumstances change substantially in that time.

How can I find the best five-year fixed mortgage rates?

Once you've considered the pros and cons and decided that a five or 10-year mortgage is for you, the next step is to find the best interest rates. This can be easily achieved with the help of our mortgage calculator – simply input your details and the type of mortgage you're looking for, and you'll be presented with a range of options that perfectly suit your needs.

From there, you're free to make your decision, but just make sure to take into account factors besides rate alone. While finding the best mortgage rates will of course be a key consideration, you'll also need to consider things like the mortgage fee and any incentives (things like cashback, free valuations or help towards legal fees can be a particular boost) to determine the true cost of the mortgage.

Make sure to look at early repayment charges so you'll know the kind of penalty you'll be faced with should you need to exit the deal, and consider opting for a portable option, particularly if you think you may need to move home in the next five or 10 years. That way, you can be sure that you've not only found the best five or 10-year mortgage rates, but that you've got a deal that accommodates your long-term needs.

Is a five or 10-year fixed mortgage a good idea?

Fixing your mortgage for five or 10 years isn't a decision to be taken lightly, but for many, such deals can prove to be the ideal solution, particularly in times of uncertainty. Find the best five and 10-year fixed rate mortgages by using our mortgage calculator and see the kind of options available.

Disclaimer: This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.

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