How Long is a Fixed-Rate Mortgage?
Fixed-rate mortgages are usually fixed for between two to five years, but longer terms of 10 years or more are possible.
Generally, the longer the rate is fixed, the more it will cost. Although the rate you pay doesn’t change, the rate may be higher for longer terms than shorter ones. This is because lenders are taking a bigger risk of sustaining your interest rate regardless of external changes, meaning they may miss out.
However, shorter terms, of say 2 years, may incur additional costs as you need to change deal more regularly. These upfront fees every few years can add up and make the numerous shorter terms more expensive overall than a reduced number of longer terms.
Cost isn’t the only important factor though. Peace of mind and stability may be very important for you, and therefore a longer term fixed-rate mortgage may be preferable.
If you leave your property within the next few years, because of family growth for example, or you want to benefit from possible interest changes in the coming years, shorter term fixed-rate mortgages may be preferable, as they give you more flexibility.
Can you Leave a Fixed-Rate Mortgage Early?
If you want to leave your fixed-rate mortgage before the fixed term ends, you can, however this will incur penalties. Lenders will want to make up for lost interest and charge you a percentage of your outstanding debt.