10 YEAR FIXED RATES

March 8, 2017 by in category Mortgage News with 0 and 0

Three years ago, according to Moneyfacts, there were only eight 10-year fixed-rate home loans available, but now there are 124. The average 10-year mortgage rate has fallen by more than a percentage point over the same period, from 4.23pc in January 2014 to just 3.2pc today.

Barclays charges slightly more at 2.59pc with a £999 fee, and permits borrowers to make overpayments of up to 10pc of the outstanding loan amount each year. Santander also offers a 10-year fix at 2.59pc with a £999 fee.

By comparison, best-buy rates for two-year fixes are currently between 1.16pc and 1.19pc for 40pc loans, while five year fixes start at 1.78pc.

However, there are still several factors to consider before you lock into a long-term mortgage rate.Historically borrowers have shied away from longer-term fixes for fear of missing out on better rates that might become available later on. But with Bank Rate at an all-time low of 0.25pc, you shouldn’t be too concerned about more competitive rates coming on to the market.

To start off with, the big appeal of a 10-year fixed rate is you can sit back and know for certain what your mortgage payments will be for the next decade. This can allow you to budget and plan your finances, safe in the knowledge that your mortgage payments won’t rise regardless of what happens in the wider economy.

Another thing to consider with a 10-year fix attractive is that you won’t have to go through all the hassle of remortgaging again in two or five years. This means you won’t have to worry about your credit record, the amount of equity in your home, or passing lenders’ strict affordability assessments.

However an issue with 10-year fixes was the lengthy lock-in period. Fixed-rate mortgages, of any length, come with early redemption charges if you want to exit the deal during the fixed period.

Circumstances can change such as divorce, death, illness or the need to move for work or to be nearer family and a 10 year deal can be expensive to get out of the mortgage early.

Theoretically, borrowers on all the 10-year fixed rates currently on the market should be able to switch or “port” their mortgage to a new property if they move house. But, in practice, moving your mortgage means reapplying for it, with the lender reassessing the loan’s affordability. So, if you’ve had a cut in income or increase in outgoings (because you’ve had children, for example), you might find your request to transfer your mortgage turned down.

10 year fixes required careful consideration

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THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

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