As the name may suggest, it’s a mortgage that retains the same interest rate for the first five or 10 years that you have it, no matter how much the lender raises or lowers its interest rates. After the initial period of five or 10 years, the rate of interest you pay will transfer to your lender's standard variable rate.
If you fix your mortgage for either five or 10 years, then your interest rate will not change for the duration of your chosen term. Other mortgage types can increase their rates any time, particularly if you have a variable rate mortgage, which can increase the amount you need to pay your lender. A fixed mortgage on the other hand ensures that your monthly repayments will stay exactly the same, regardless of what happens to rates during your fixed period. This may offer peace of mind since you don't need to worry about rising rates. Conversely, if mortgage rates go down, you will still be required to pay the fixed amount you agreed with your lender, so choose carefully!
To put it simply, these mortgages are most suitable for people who want the certainty of their payments for the long term and are not likely to have a change in circumstances during the initial mortgage term.
If you've decided that a long-term fixed rate mortgage is for you, there's plenty of factors to consider; primarily:
The mortgage rate
The rate will be determined by the size and value of the property you want a mortgage for, as well as your credit score and the size of your down payment (deposit). Generally speaking, the more money you can put down for a deposit, the better your mortgage rate will be since you present less of a risk to the lender.
Keep on the lookout for fees! Some of the lower five to 10-year fixed mortgage rates may look very attractive, but they may come with a painful arrangement fee, which can sometimes undo any benefit you would enjoy from the lower rate.
Fees and other charges
As always, you must read the small print! Sit down and work out how much you will be charged at the beginning and end of your mortgage. It's also worth knowing how much you will be charged if you need to cancel – even if you never do it, as it's better to be prepared. Work out the full cost of your mortgage including fees when you compare.
You may find that the introductory rate on a short-term fixed rate mortgage is lower than that of a five to 10-year fixed rate mortgage, or if you choose a variable rate mortgage. Compare the Best Buy charts of these fixed rate mortgage and variable mortgages:
Before your five-year fixed rate mortgage comes to an end, look at the mortgage deals available to see if you can find a better offer than the rate you will pay once moved onto your lender's standard variable rate.
Our mortgage calculator helps you to see how much your mortgage might cost you each month.
Our how much can I borrow calculator gives you a range of how much a lender might consider lending you under a mortgage. This calculation is only an indication only.
Read our How much can I borrow for a mortgage guide to find out more about what can impact your potential sum of borrowing.
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.