Is 10 years too long to fix a mortgage?
There’s been a recent rise in low rate 10 year mortgages available for home buyers, but are they a good thing?
The Money Advice Service has broken down the pros and cons.
Ten year mortgages – the pros and cons
Getting a mortgage will probably be one of, if not the biggest financial decisions you’ll ever make. But there’s no definite answer on what makes the right mortgage for you as it all depends on your own individual circumstances.
It’s well worth getting advice first which will help you understand all the different options available and what could best suit you, not just for now but also for future plans such as moving house. Getting advice also provides you additional protection if the recommendation later proves to be unsuitable.
Also, make sure you thoroughly check the small print and understand what your mortgage allows.
You can learn more about mortgages in this beginner’s guide from the Money Advice Service.
The advantages of a fixed term mortgage
– If you need long term certainty on the repayments you make, a 10 year fix could be really useful. Having a fixed rate mortgage means you’ll know exactly how much your repayments will be for every month that you are fixed. This gives extra security that’ll you’ll be able to keep making payments, especially if you have children or other dependants
– Should interest rates rise, your payments won’t. You’re locked into the rate and the mortgage provider can’t change it for the duration of the fix
– You’ll find budgeting easier as it’s a big outgoing which won’t change
The disadvantages of a long fix
– If base interest rates don’t rise for a while, or get cut further, you could end up paying more than if you’d been on a tracker or standard variable rate mortgage
– The mortgage’s interest rate will generally be higher the longer you fix
– The best deals require a large deposit.
– With all fixes, watch out for high fees hidden behind the low rate, though any fees you need to pay have less effect as they’re split over a longer period
– If you want to get out of a fix early you’ll often have to make some large penalty payments. These are at their most severe in the early years
– If you want to move house, or need to remortgage, you may find your options limited
Find out what you might be able to borrow with the Money Advice Service affordability calculator
All information accurate at time of publication
This article is provided by the Money Advice Service.
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