Long Term Fixed-Rate Mortgages

Given all the uncertainty in the UK housing market today, a long-term fixed-rate mortgage could seem desirable. Locking in an interest rate long-term means a level of security and stability that’s hard to come by. But what constitutes long-term? Does it equate to a higher interest rate? And would it be better for your specific situation to get a longer fixed term mortgage versus a shorter one?

The guide below answers all those questions while sharing where to go for extra help in making this decision.

What is a long-term fixed-rate mortgage?

The most common fixed-rate deal is two years but increasingly more people are looking at long-term options which would include 5, 7 and 10-year fixed-rate mortgages. Anything over 10 years is considered rare but it is possible to get up to 40 years or more on a fixed rate agreement.

Sidenote: Don’t confuse your mortgage term with your fixed-rate arrangement. Your mortgage term is the length of time you have taken out your mortgage loan, typically around 25 years. A fixed-rate deal is the time period in which you have agreed a set interest rate. You can have multiple fixed-rate deals within your mortgage term.

The best long-term fixed-rate mortgage deals currently available

The typical interest rate you could expect on a long-term fixed rate mortgage will sit somewhere between 4% and 5% at the time of writing (May 2023). There are certain circumstances where you might find a lower and higher rate.

Head to our mortgage rates guide to find out what rates are currently available and learn what factors affect the deal you will be offered.

Should you be considering a longer-term fixed-rate mortgage, a broker would be able to share which lenders might offer these. There are currently a handful of lenders offering 40-year fixed-rate mortgages but they typically come with higher rates than those above.

All rates are subject to change which is why it’s best to work with an expert who monitors the market and can share any updates.

Can you get a fixed rate for the full term of your mortgage?

Yes, given that the average mortgage term is 25 years, it’s possible to secure the same interest rate for the duration of your mortgage but the number of lenders willing to do this is low.

It’s worth connecting with a mortgage broker if you think this is an option you’d like to explore, as they will know exactly which lenders to approach for this and can make you aware of the full implications of fixing in for so long.

Is it better to get a short-term or long-term fixed-rate mortgage right now?

More people are considering a long-term fixed-rate mortgage right (August 2022) now, mainly because of the current climate of uncertainty around the housing market as well as the cost of living crisis. But whether it’s a good option for you will depend on your personal and financial situation, future plans and whether you’d prefer to have long-term clarity on what you’ll be repaying versus trying to get more value for money.

A consultation with a mortgage broker could help you determine which might be best while the below list lays out the key advantages and disadvantages of long-term fixed-rate mortgage versus a short-term one.

How a broker can help secure the best long term fixed-rate deals

It can be tricky to decide whether a short- or long-term arrangement is right for you and then, once you have, to find the best deal available. This is where an expert can help.

The brokers we work with…

• Operate in the lending market on a daily basis and can quickly advise on which lenders are currently offering both the best short-term and long-term fixed rate mortgages.
• Will work with you to decide if a long-term arrangement is best for you and, if so, whether you should opt for a 5, 10, 15 or even 40 year deal.
• Can advise you on which lender is more likely to approve your application based on any nuances there might be in your situation; perhaps you’re self-employed, retired, or plan to buy a property of non-standard construction.

Can you pay off a long-term fixed-rate mortgage early?

You can, but typically this would mean paying an ERC. The amount can be anywhere between 1% and 6% of your mortgage. How much you’d pay will be in your paperwork or else you can ask your lender.

There could also be other charges if you choose to close your account with the lender. A broker would be able to help you decide whether all the fees would make it worthwhile to pay off the mortgage earlier than planned.

Do you get the best rates if you stay with your existing lender?

Not necessarily. One of the biggest myths in the mortgage industry is that lender loyalty is always repaid with better deals or more favourable rates.

Fixing in for the long term with your existing mortgage lender is not recommended, unless you’ve checked the whole market first to make sure there isn’t a better deal elsewhere.

This is why it pays to speak to a broker before you take your lender up on the offer of a long-term fixed-rate deal. They will check what your current lender is offering you can compare to what’s on offer across the whole of the market.

If your current lender’s fixed-rate offer is the best available to you, your broker is obligated to advise you that this is the case, so you can proceed with complete peace of mind.

Speak to a broker experienced in longer-term mortgages

Whether you’re still making up your mind about a long-term fixed-rate mortgage, can’t decide on the length or have found a deal you think is good, you should speak to a mortgage professional.  Going beyond generic advice to support that’s tailored to your situation, the brokers we work with can talk you through all your options and, when the time is right, find the best long-term fixed-rate mortgage for you.

Reach out to our team today and our free broker-matching service will pair you with a lender who has the expertise to meet your needs. Call 0808 189 0463 or fill out this enquiry form.