We look for the best mortgages for 10 years
When looking to take out a mortgage for a new home, it's important to plan out your repayment strategy in advance. Failure to take things like duration or monthly cost into consideration can have disastrous implications for the finances of you and your family.
For a mortgage with a duration as high as ten years, the best solution would be to seek out banks offering mortgages for 10 years, known as 10 year fixed rate mortgages. These are mortgages where the rate you sign for is the rate you pay for the next ten years, regardless of what happens with the national base rate for lending, nor the standard variable rates (SVR) of the lender in question.
While these type of mortgages certainly offer a good deal of stability in that you'll always know exactly how much you need to pay regardless of what happens in the financial world, you are likely to find that the interest rates are slightly higher than you would expect from a regular SVR based mortgage.
The reason for this is clear - banks need to protect themselves from the unexpected. A fixed rate mortgage can end up swinging both way; it could turn out to be good for the bank if national base rates fall, but alternative if they continue to rise it will be the borrower who will benefit, often at the cost of the bank.
Another problem with 10 year fixed rate mortgages is the fact that you will face incredibly high penalties should you decide to move home at any stage during the terms of the agreement. Some lenders do offer much more reasonable terms after the initial three or four year period to allow you to move home, but most do not.
It is currently quite difficult to track down 10 year fixed rate mortgages given the economic climate. Banks know that the national base rate for lending is only going to go in one direction; upwards - and that means that by committing themselves to a mortgage at the current rate, they are risking taking substantial hits if the rate continues to rise.