The best long-term fixed rate mortgages
There is once again talk of base rate rises, which means mortgage rates could follow. So is the time right for a long-term fixed rate deal?
The base rate has been frozen at 0.5% since March 2009. This, coupled with the Funding for Lending Scheme which allows banks and building societies to borrow cheaply, has caused mortgage rates to fall to record lows.
The Bank of England’s forward guidance has tried to reassure borrowers that rates won’t rise again until unemployment drops below 7%, which might not be until 2016.
But the National Institute of Economic and Social Research (NIESR) suggested last week that the Bank of England could increase rates as soon as 2015 to stop the economy overheating. This is also when the Funding for Lending scheme comes to an end.
Those on a variable or tracker mortgage, or even those reaching the end of a fixed deal, may want to consider how they would cope if rates start to creep up.
One way to shield yourself from the impact of the inevitable rate rises is to consider a longer lasting fixed rate mortgage.
The long and short of it
With a fixed rate mortgage you get the security of knowing exactly how much you need to pay each month. This peace of mind usually comes at a premium though compared to variable or tracker mortgages.
Two- and three-year fixed rate deals tend to be the most popular, but these short-term fixes could mean your deal finishes just as rates start to rise.
With a long-term fixed rate mortgage you can lock into 2013 rates for five to ten years and avoid having to pay to remortgage so often. And because rates are so low you can overpay your mortgage to build up equity.
However, many come with early repayment charges which means you have to pay a fee to leave your mortgage early, which you might need to do if your circumstances change.
But if the extra protection outweighs the penalties for leaving, here are some of the best deals to consider.
Best five-year fixed rates
If you're in the market for a five-year fixed rate you'll have plenty of choice.
According to Moneyfacts there are 681 five-year fixed rate mortgages available at the moment. This is up from 526 that were available at the same time last year.
Deals come in a variety of different loan-to-value ratios from 60% up to 95%, so those with deposits as small as 5% can also benefit.
In the table below I have picked out the two best deals available per loan-to-value category.
|
Provider |
Term |
Rate |
Fee |
LTV |
ERCs |
|
Fixed until 31/12/2018 |
2.88% |
£999 |
60% |
3% of the balance repaid until 31 Dec 2018 |
|
|
Five years |
2.89% |
£999 |
60% |
5% between 4 and 5 years left 4% between 3 and 4 years left 3% between 2 and 3 years left 2% between 1 and 2 years left 1% for less than a year left |
|
|
Fixed until 30/11/2018 |
2.69% |
£1,475 |
65% |
4% to 30/11/15 3% to 30/11/16 2% to 30/11/17 1% to 30/11/18 |
|
|
Five years |
2.84% |
£295 |
65% |
4% in years 1-2 3% in year 3 2% in year 4 1% in year 5 |
|
|
Fixed until 01/12/2018 |
2.94% |
£699 |
70% |
5% before 2 December 2015 4% before 2 December 2016 3% before 2 December 2017 2% before 2 December 2018 |
|
|
Fixed until 02/02/2019 |
2.99% |
£995 |
70% |
None |
|
|
Fixed until 31/12/2018 |
2.79% |
£1,675
|
75% |
4% to 31/12/15 |
|
|
Fixed until 30/11/2018 |
2.84% |
£845 |
75% |
4% to 30/11/15 3% to 30/11/16 2% to 30/11/17 1% to 30/11/18 |
|
|
Fixed until 30/11/2018 |
3.35% |
£890 |
80% |
None |
|
|
Fixed until 30/11/2018 |
3.39% |
£799
|
80% |
5% until 30/11/2016 4% until 30/11/2017 3% until 30/11/2018 |
|
|
Fixed until 31/12/2018 |
3.74% |
£1,675
|
85% |
4% to 31/12/15 3% to 31/12/16 2% to 31/12/17 1% to 31/12/18 ? |
|
|
Fixed until 31/12/2018 |
3.75% |
£995 |
85% |
5% of the sum repaid until 31/12/2018 |
|
|
Chelsea BS ** |
Fixed until 31/12/2018 |
4.34% |
£1,675 |
90% |
4% to 31/12/15 |
|
Fixed until 01/11/2018 |
4.39% |
£299 |
90% |
Six months’ interest early repayment charge applies until 01.11.2018 |
|
|
Furness BS** |
Five years |
4.75% |
£0 |
95% |
5% for first five years |
|
Five years |
4.99% |
£99 |
95% |
5% of the advance amount applies if the loan is repaid in full within the first 5 years |
*At least one applicant must have a Metro Bank Current Account
**Branch only, so limited by area
Santander and Hinckley and Rugby boast the only top deals which come with no early repayment charges.
Of the rates outlined above Yorkshire Building Society offers the lowest rate of 2.69% to those with a 35% deposit, but comes with a £1,475 fee. The monthly repayment on a £150,000 mortgage would be just £687 a month for five years.
Those with a smaller deposit of 5% can get a best buy rate from Loughborough Building Society of 4.99% with a tiny £99 fee. On the same mortgage, repayments would be £876.
There are also a variety of Help to Buy mortgages available from lenders with only a 5% deposit needed. This is a scheme open to first-time buyers and existing homeowners wanting to move up the ladder. Read The best Help to Buy mortgages.
Best ten-year fixed rates
There are fewer ten-year fixed rate mortgages to choose from - in fact there only 16 available at the moment according to Moneyfacts.
However, at the same time last year there were only three!
Unfortunately, you won’t be able to find a ten-year fixed rate with a deposit of less than 20%, but here are nine of the best ten-year deals available right now arranged by rate that you might be able to get.
|
Provider |
Term |
Rate |
Fees |
LTV |
ERCs |
|
Ten years |
3.84% |
£0 |
75% |
7% in years 1-3 6% in year 4 5% in year 5 4% in year 6 3% in years 7-8 2% in year 9 1% in year 10 |
|
|
Fixed until 31/12/2023 |
3.89 |
£1,499 |
70% |
6% until 31 Dec 2020 3% until 31 Dec 2023 |
|
|
Fixed until 30/11/2023 |
3.89% |
£130 |
75% |
7% to 30/11/16 6% to 30/11/17 5% to 30/11/18 4% to 30/11/19 3% to 30/11/21 |
|
|
Fixed until 31/12/2023 |
4.49% |
£1,999 |
75% |
6/6/5/5/5/5/4/4/3/2% |
|
|
Fixed until 31/12/2023 |
4.59% |
£1,999 |
80% |
6/6/5/5/5/5/4/4/3/2% |
|
|
Fixed until 31/12/2023 |
5.19% |
£999 |
75% |
6% up to December 2019 5% up to December 2020 4% up to December 2021 3% up to December 2022 2% up to December 2023 |
|
|
Fixed until 31/12/2023 |
5.19% |
£999 |
75% |
6% up to December 2019 5% up to December 2020 4% up to December 2021 3% up to December 2022 2% up to December 2023 |
|
|
Fixed until 31/12/2023 |
5.69% |
£0 |
75% |
6% up to December 2019 5% up to December 2020 4% up to December 2021 3% up to December 2022 2% up to December 2023 |
|
|
Fixed until 31/12/2023 |
5.69% |
£0 |
75% |
6% up to December 2019 5% up to December 2020 4% up to December 2021 3% up to December 2022 2% up to December 2023 |
The best on offer right now comes from Norwich and Peterborough Building Society with a rate of 3.84%. The deal doesn't come with any fees, however, you'll need a deposit of 25% to apply. If you borrowed £150,000 your repayments would be just £779 a month for ten years.
All the deals come with early repayment charges though and the cheapest deal from Norwich and Peterborough comes with one of the steepest fines for leaving early.
See the latest mortgage rates and get expert advice
This article aims to give information, not advice. Always do your own research and/or seek out advice from a regulated broker (such as one of our brokers here at lovemoney.com), before acting on anything contained in this article.
Your home or property may be repossessed if you do not keep up repayments on your mortgage.
More on mortgages:
Alternatives to Help to Buy mortgages
Second charge mortgages: pros and cons
Seven reasons mortgage lenders turn you down
Interest-only mortgages: the banks that will still lend
The best mortgages with no early repayment charges
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