Benefits of taking out a 10 year fixed rate mortgage
Interest rates have been at a record low of 0.5% for around six years now and with the economy showing some early signs of recovery there will inevitably have to be an interest rate increase at some point over the next couple of years. When that happens mortgage interest rates will also go up accordingly. This is where you can give yourself protection from interest rate rises for the next ten years by taking out a 10 year fixed rate mortgage.
What are the requirements to qualify?
There is little difference between the requirements for a 10 year fixed rate mortgage and other fixed rate mortgages. However you are likely to find that you can qualify for some of the best fixed rate mortgage deals with a slightly higher maximum LTV than for other lengths of deal. You can access some of the best deals with an LTV of around 70%, but in order to have the largest choice of deals you will need an LTV of around 60% or lower.
Why would I want to have a 10 year fixed rate?
Even though the interest rates you will pay will initially be higher than for other lengths of fixed term deal you will find that as soon as you go beyond the two year point that you will find yourself paying less interest than those who took out the two year deal and in order to get back onto a fixed rate they will also have to pay more fees. So if you want to make sure your mortgage payments remain fixed and affordable for the next ten years, this is the length of fixed rate mortgage deal for you.
Is there anything to watch out for?
The main thing to watch out for with a ten year fixed rate mortgage is any restriction that are part of the deal. These can include early repayment fees and a limit on the amount of money you can pay off the mortgage each year. If you are not predicting having the money to make a lump sum payment off your mortgage, then this could be an ideal way for you to save money over the ten years as you will know that your mortgage payments will not rise.
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