Cheapest-ever 10-year fixed-rate mortgage launchedBarclays offers 2.99% on its new mortgage deal

15 January 2015

Row of UK houses

10-year mortgages generally come with high exit fees so they're not suitable for everyone

Barclays has launched a 10-year fixed-rate mortgage with an interest rate of 2.99%* - the lowest rate ever offered on this type of loan.

Mortgage borrowers will need a deposit of 40% in order to take out the deal, which hit the market last week and has an application fee of £999.

Barclays is not the only lender offering a cheap 10-year fixed-rate mortgage. In recent months the market has become increasingly competitive.

10-year fixed-rate mortgage deals on the rise

In the past six months the number of 10-year fixed-rate mortgages on offer has almost tripled, rising from 23 to 77.

Santander and TSB are both offering 10-year fixed-rate mortgage deals at 3.44%*. First Direct, Nationwide and Leeds Building Society are among six other lenders also offering long-term fixed-rate mortgages.

If you'd like to receive unbiased advice on the best mortgage for your personal circumstances, call Which? Mortgage Advisers on 0808 252 7987.

Beware early repayment charges

With many economists anticipating that the Bank of England base rate is likely to increase at some point in the coming year, the long-term security of a 10-year fixed-rate mortgage is likely to appeal to many. However, it's important to bear in mind that if you wanted to exit this type of mortgage early you would generally pay a hefty fee.

For example, to get out of a 10-year Barclays mortgage within the first seven years of the deal you'd have to pay 6% of the sum you had repaid (3% in the final three years). Santander would charge 6% of the outstanding balance if you exited at any time within 10 years. TSB charges an early redemption fee for the first five years, starting at 5% of the sum repaid and decreasing every year to 1% in the fifth year of the deal.

Most mortgages are portable these days, so you should be able to stay on a deal if you move house, but this will be at your lender’s discretion. There is no guarantee your circumstances will fit the lender’s criteria at the time.

Rupert Swetman of Which Mortgage Advisers said: ‘10-year fixed rates are currently being launched at some very attractive interest rates - however, they might not be right for everyone. Customers must consider their future plans due to the long period of commitment. It might be that a different type of mortgage would better suit their needs.’

Five-year fixed-rate mortgages another option

For borrowers who are looking for security but don't want to be tied in for 10 years, there are attractive rates available on five-year fixed-rate deals too. There is plenty of choice on offer, with over 900 five-year fixed mortgages on the market.

One of the cheapest rates on a five-year fixed-rate mortgage at the moment is a 2.39% deal from Barclays*. 

To compare hundreds of fixed-rate mortgage deals in one place, visit the Which? Money Compare mortgage comparison site.

More on this…

*APRs for the 10-year fixed-rate mortgage deals mentioned are: Barclays (3.4%), Santander (3.7%), TSB (2.9%). APR for Barclays' five-year fixed-rate mortgage is 3.6%. APR is a way to compare the cost of mortgages, however it is an imperfect measure – find out more in our 'what is mortgage APR?' video.

Which Ltd is an Introducer Appointed Representative of Which? Financial Services Ltd, which is authorised and regulated by the Financial Conduct Authority. Which? Mortgage Advisers and Which? Money Compare are trading names of Which? Financial Services Limited.