The number of 10 year fixed rate mortgages have jumped in recent years. These loans have the benefit of reducing the uncertainty of payments by fixing the monthly repayment for a longer term. The rates are still falling for these mortgages, even though the rates of other mortgages are on the way up. These mortgages have a downside though as well. Most of these loans have early repayment fees which ties the home owner to the loan for the entire term.
- Recent Moneyfacts data indicates that both supply and demand of 10-year fixed rate mortgages are increasing.
- Generally, 10 year fixed rate mortgages are less beneficial to those with high loan-to-value ratios.
- Many ten year fixed rate mortgages include substantially large early repayment fees to ensure that the loan really does take ten years to pay off.
““In times of uncertainty, borrowers’ thoughts go to how they can protect their monthly repayments – fixing their rate for 10 years does just that. In fact, the gap between the average five-year fixed rate and 10-year fixed rate has decreased significantly, with the gap between these two deals now just 0.17% compared to a whopping 0.39% in July 2016.””