Ten-year fixed-rate UK mortgages ‘are now incredible value’
Locking into a 10-year fixed-rate mortgage used to come at a considerable cost but as interest rates on shorter-term home loans have edged up, the price of a decade's worth of certainty has fallen. "They're not having to pay as big a premium for it."It is important not to make your decision based solely on the rate because it could turn out to be an expensive mistakeMark Harris of SPF Private ClientsOn a mortgage of £180,000 over 20 years the monthly price difference between the cheapest two-year deal and the cheapest 10-year deal is £16.78. Mark Harris, the chief executive of the mortgage broker SPF Private Clients, says there is currently "Some incredible value" on offer in 10-year mortgages. If 10 years sounds too long, there could be a happy medium, Hollingworth says - Yorkshire building society and Barclays have seven-year fixed-rate mortgages, at 3.29% and 2.89% respectively. Fixed-rate mortgages tend to have an annual overpayment limit of 10% of your total mortgage balanceTrussle's Amanda Aumonier"The core markets are two and five years, then people leap to 10 years, but if you want to tailor it to the timeframe for your personal circumstances, there are other options," he says. You may not plan to repay your mortgage early but if you know you will get a pay rise at some point, or maybe receive an inheritance, you might want to be in a position to clear some of your borrowing. "Fixed-rate mortgages tend to have an annual overpayment limit of 10% of your total mortgage balance. Whereas if you're on your lender's standard variable rate or on a tracker mortgage, there does not tend to be a limit," Aumonier says.