Demand for long-term fixed rate mortgage deals has soared in recent months, with many people worried by ongoing political and economic uncertainty and the impact Brexit could have on their mortgages.
According to Yorkshire Building Society, it has seen a 50% increase in demand for decade-long fixed rate mortgages between 2018 and 2019.
A growing number of lenders, including Virgin Money, Yorkshire Building Society and its broker brand Accord, have responded to this demand by launching deals lasting for as long as 15 years.
You don’t need a big deposit to qualify either. Yorkshire’s 15-year fixed rate mortgages are available to those with just a 10% deposit. It also offers 15-year mortgages to those with 15%, 25% or 35% to put down, and all deals come with free standard valuation and a £495 completion fee.
However, to qualify for Accord’s 15-year offering, you’ll need a deposit of at least 25% of the property value.
Locking in for the long term – things to considerIf you’re thinking about locking into a long-term fixed rate mortgage, it’s vital to weigh up the pros and cons first.
Some of the benefits of a long-term fixed rate include:
• Peace of mind that your payments won’t change if interest rates rise in future
• Low interest rates mean that there are some very competitive long-term fixed rates deals to choose from
• Depending on how long your mortgage has left to run, you may be able to see out your mortgage on the same rate
• Can help with budgeting if you’re financially stretched and need to know exactly what’s going out and coming into your account each month.
However, there are also some potential drawbacks to be aware of, such as:
• If your circumstances change and you need to redeem your mortgage during the fixed rate period, you’ll usually have to pay an Early Repayment Charge which can often run into hundreds if not thousands of pounds
• If interest rates fall in future and you’ve locked into a long-term mortgage, you won’t be able to benefit if more competitive rates become available
• Although most long-term fixed rate mortgages are portable if you move home, you’ll need to reapply for your deal and meet your lender’s eligibility criteria at the time.
• If you need to borrow more, this will usually have to be at a different interest rate to your existing fixed rate mortgage.
There’s lots to consider, so seek expert advice if you’re not sure whether this sort of deal is right for you, or if you want to talk through other mortgage options which might be available to you.