Barclays has introduced its lowest ever 10-year fixed rate mortgage for those with a 40% deposit or the equivalent amount of equity.
The mortgage, which is fixed at 1.99%, is currently the lowest 10-year fixed rate deal available. Barclays has also reduced several of its other shorter-term fixed mortgage rates, and has introduced a range of new tracker deals.
Locking into a long-term fixed rate can provide valuable peace of mind that you’ll know exactly what your mortgage payments will be for several years, regardless of what happens to interest rates during this time.
Consider your circumstances
If you’re considering a fixed mortgage that lasts for 5 or 10 years or even longer, you’ll need to think carefully whether your circumstances are likely to change during this time. The majority of long terms deals carry Early Repayment Charges for the length of the fixed period, so it’s important to consider any changes that could occur over the next decade, and whether more flexibility may be needed.
Although fixed rate deals are typically portable, so you can transfer them over to another property if you move house, this isn’t always as straightforward as it sounds.
For example, if your new home costs more than your previous property, you may need to arrange additional borrowing. This may not be at the same rate as your existing mortgage, so you could end up paying two different rates, with your deals ending at different times. You may also find that if your financial circumstances have changed since you first took out your mortgage, you may not meet your lender’s affordability criteria and therefore can’t port your mortgage to your new home.
It’s also possible that rates could fall further in future, but you won’t be able to benefit as you’re tied into your current deal. However, given that interest rates are already exceptionally low, this is less of a risk than locking into a long-term fix when interest rates are higher and have further to fall.
Bear in mind that if you’re nervous about locking into a long-term fixed rate mortgage, plenty of other terms are available including two, three and five-year fixes. Find out more about the benefits and drawbacks of fixed rate mortgages in our guide to fixed rate mortgages.
Representative example A mortgage of £201,987 over 22 years, initially fixed at 1.99% until 31/07/30 followed by Standard Variable Rate of 3.59% for the remaining 12 years would require 120 payments of £945.39 and then 144 payments of £1,035.58. The total amount payable would be £263,684 made up of the loan amount plus interest (£60,583) and fees (£1,114). The overall cost for comparison is 2.5% APRC representative.
Barclays launches 10-year fixed rate mortgage below 2%