Why locking yourself into a mortgage for a decade could save you thousands

Trends come and go, and that includes fiscal trends. Right now, ten year, fixed-rate mortgages are getting a possible moment in the U.K., as more and more major banks launch the option. Is one right for you?

Of course, fixed rate mortgages that go on for ten-to-thirty years are par for the course in the U.S. And decade-long ones are not abnormal in other European countries. However, the UK has routinely had fixed rate mortgages for homes only for the first two years. This means a remortgage process after, unless the homeowner is willing to live with the higher rate.

A decade-long fixed rate could save canny UK home-buyers. No remortgage worries, no credit impact, no surprises with payments. Locked in could be nice. But, there is a price for all that blissful bump-free assurance. These types of mortgages are generally more expensive, requiring a significantly heftier down payment. The price could be getting more competitive however, as more banks see the point of offering them. But, it’ also important to realize that getting out of the deal is pricey too. There’s generally some steep monies attached to the privilege of pulling out sooner than ten years. So, the option may be better for older buyers.

Key Takeaways:

  • While many parts of the world have routinely offered fixed rates for 10 years or more, the UK has traditionally offered 2 year options.
  • Such a mortgage is a good option for long-term buyers, as it means no remortgage hassles and no credit or payment surprises.
  • It may not be a good option for those who think they may move in a couple of years, as the penalty for repayment is steep.

“But now two of the UK’s biggest lenders have launched 10-year fixed mortgages aimed at homeowners staying in their properties for the long haul.”

Read more: https://www.mirror.co.uk/money/10-year-stretch-locking-yourself-12934851

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