How do 10-year fixed-rate mortgages work?
A 10-year fixed-rate mortgage works in a similar way to other fixed-rate deals. Your interest rate will be locked in for ten years, so your mortgage payments are guaranteed to stay the same for a decade. Once this 10-year period is over, you’ll be moved to the lender’s typically more expensive Standard Variable Rate (SVR) unless you remortgage to a new deal.
Deposit requirements
A larger deposit will certainly help you to qualify for the best 10 year mortgage rates, but this is true no matter the length of your fix or whether you take a fixed or variable rate mortgage.
That’s because the length of your fixed-rate mortgage deal has no direct impact on your deposit requirement – it is determined by the loan-to-value (LTV) of your borrowing (the amount you need to borrow compared to the full cost of the property).
Each lender usually has a set maximum LTV for each mortgage product, but also make adjustments based on your personal circumstances.
Interest rates
Longer term fixed-rate deals are typically more expensive than short-term fixes (2 year fixed and 5 year fixed mortgage rates) as you’re paying a premium for the security of locking in a rate for longer.
Associated fees
When working out how much a 10-year fixed-rate mortgage might cost, you’ll need to factor in mortgage fees and charges as well as the interest rate. This can include product fees (typically around £1,000), valuation fees (£150 to £1,000 or more depending on your property value, although some mortgage deals offer free valuations) and early repayment charges for leaving your previous deal if you’re still in a fixed term.
What happens at the end of my 10-year fixed-rate deal?
It’s a good idea to compare remortgages around six months before your 10-year fixed-rate deal is due to end to see if you could switch to a cheaper deal.
You can usually lock in a remortgage rate up to six months in advance, but you won’t be tied to it until your current deal ends. This means you can switch again if a better deal becomes available before then.