Compare 10-Year Fixed Rate Mortgages

You can carry out your own research and approach the mortgage lender directly. But, equally, a mortgage broker can do the legwork for you and often access deals that are not available on the open market.

A broker’s expertise can also come in useful if any issues need ironing out, or your circumstances or income is unconventional.

A successful mortgage application will depend on your eligibility criteria – such as your income and that of your partner if it’s a joint mortgage.

Lenders will also look at how much other debt you have outstanding from, say credit cards or loans. Your credit rating is also vital as an indicator of your reliability to repay a loan in the future.

Mortgage brokers, such as Better.co.uk, carry out a ‘soft’ credit check which won’t be visible to other lenders. This provides an indication of whether you’re likely to be accepted for the deal before you formally apply. It avoids a scenario in which you make multiple applications (a red flag when applying for borrowing) as a result of being turned down for previous ones.

An arrangement fee is commonly payable when you take out a fixed rate mortgage.
Costs vary but £1,000 is typical for a competitive rate.

If there’s no arrangement fee, the interest rate will likely be higher as a result. Note, that we’ve based our average costs across both fee-paying and fee-free deals.

You can opt to add any arrangement fee to your mortgage debt rather than pay it upfront. However, this will increase your borrowing and, subsequently, the interest you pay.

A booking fee is a non-refundable one-off cost when you apply for a mortgage. Not all deals come with one, so costs range from zero to a couple of hundred pounds.

Valuation fees can also be charged, which allows lenders to check properties are worth the amount you want to borrow. But, especially for remortgages, these can often be waived as an incentive to attract your custom.

Early repayment charges are triggered if you quit your fixed-rate mortgage before the end of the agreed term and are always best avoided if possible. ERCs are charged as a percentage of the loan outstanding and can amount to thousands of pounds. In many cases they are tiered, so the closer you get to the end of the deal, the cheaper it becomes to leave.

Signing up for a 10-year mortgage deal requires particular attention as you’ll pay fees to redeem the mortgage early for the next decade.

Mortgage exit fees may also be charged – in relation to the administrative tasks of creating or closing a mortgage.

While it’s called a fixed rate mortgage, this term mainly applies to the interest rate which doesn’t move for the duration of the deal, regardless of what happens to the Bank of England base rate (interest rates).

Tie-ins apply for the term of the fixed rate deal during which time it will cost you to redeem the entire loan early.

However, it’s usually possible to make overpayments of up to 10% of the total outstanding loan amount each year penalty-free. If you are able to do this, it will reduce the total interest you pay and help to clear the balance sooner.

Most mortgage deals, including 10-year fixed rates, are also ‘portable’ which means you can move house and take the same loan with you. However, this is not guaranteed and is subject to eligibility both against your personal circumstances and the property you want to move to.

Early repayment charges (ERCs) typically last for the fixed-rate term. So, in the case of a 10-year fixed rate, this is a major commitment. The charges tend to cost between 1% and 5% of the outstanding debt.

Many lenders operate a tiered charging system, however, in which the ERC is reduced with each year of the loan. So, the nearer you get to the end of the 10 years, the less it costs to leave.

It stands to reason that any new mortgage deal will need to generate savings in excess of the ERC to make an early exit worthwhile.

The answer to this depends on your circumstances, objectives and preferences.

But scenarios in which a 10-year fixed rate mortgage could be suitable include being settled in a family home where you intend to stay until the children leave, or being 10 or so years away from retirement with a fixed income and relatively small mortgage.

We’ve listed the pros and cons below.

Pros

• long-term certainty around the cost of your monthly mortgage repayments
• lock in when interest rates are low
• avoid frequent remortgaging fees
• sidestep fluctuations in lending criteria and credit checks for 10 years.

Cons

• steep penalties may apply if you want to repay the mortgage before the end of the 10-year term
• monthly repayments on a 10-year fix could be higher than on a two- or five-year fix (although this depends on the prevailing market)
• miss out on potentially cheaper deal should interest rates fall
• more limited selection of 10-year fixes than other fixed rate terms.

At the end of your fixed rate term, you will automatically revert to the lender’s standard variable rate (SVR). This is uncompetitive compared to other deals but then there is generally no charge to switch away.

You can also typically overpay an SVR deal without restriction.

That said, it’s best practice to choose a new mortgage deal before landing on SVR as even one month of paying the higher interest could cost hundreds of pounds. You can secure a new mortgage up to six months in advance of your current one ending.