15 Year Fixed Rate Mortgages

15 year fixed mortgage deals increase in popularity

It's no secret that 15 year fixed rate mortgages and longer-term mortgages, in general, are becoming more popular as people seek security and certainty. If you're looking for consistency in your mortgage payments, or are worried about interest rates increasing, a longer term fixed rate mortgage could be the right option for you! 

Although you will have a higher monthly payment than someone on a variable deal, with a fixed rate mortgage, you'll make the same monthly payments for the entire fixed duration, which in this case, would be for 15 years.

If this is what you're looking for, then continue reading to find out more about how these loans work and why they are becoming increasingly popular. At Tieto, we compare rates and thousands of deals from hundreds of lenders, including those offering market-leading rates on long term fixed mortgages. Get started now, and you could get a decision in principle in minutes!

Exactly what a fixed rate mortgage means

A fixed rate mortgage deal means that you have an initial period of your mortgage where the interest rate and your monthly payment are fixed at a set amount.

This is in contrast to variable rate mortgages, where the interest rate you pay tracks an external rate, typically with the Bank of England Base Rate for mortgage in the UK.

So what's the benefit of a fixed rate mortgage?

Fixed rate mortgages are one of the most popular mortgage types in the UK.

They are especially popular among first time buyers who often have little experience with mortgages and fear that interest rates may rise in the future. A fixed rate mortgage is also more secure than a variable rate deal because you know exactly what your payments will be for the full term of your loan. This can be important if you're struggling to make ends meet or have a household with lots of expenses.

For many people, the security and stability that comes from fixed rate mortgages is worth giving up some flexibility in your monthly payment to get it. Fortunately for you, there are a number of options when it comes to longer term fixed rate mortgage deals so that you can find something that suits your needs perfectly.

What happens if interest rates rise?

With a fixed rate mortgage, even if interest rates increase, you'll make the same monthly payment for the fixed time as agreed with your lender.

For complete clarity, this has a different meaning to the term of the mortgage, but it could be the same amount of time. For example, you could have a mortgage term of 25 years, but an initial fixed period of 15 years. This means that after the initial 15 years, you would have 10 years left on your mortgage term, on the lender's Standard Variable Rate. However, it's common to choose to remortgage at this point, either to a new fixed rate mortgage or switching to a variable rate mortgage with a better rate.

Monthly payments for fixed rate mortgages

If you have a fifteen year fixed rate mortgage, there are no surprises in terms of what your mortgage payment will be each month because it remains unchanged for 15 years.

When it comes to mortgage payments, with a fixed rate mortgage you will typically pay a little more than on a variable rate mortgage. This is for the benefit of securing your payments over a period of years. For example, on a 15 year fixed rate mortgage, you'll have the benefit of knowing that your mortgage payments will not change for the entire 15 year period - this is not something that can be said of variable rate mortgages.

During the initial period, your fixed interest rate and monthly payments will be set and won't change. Once the fixed-rate period ends, by default, you'll typically move to the lender's Standard Variable Rate (SVR); however, many people choose to remortgage at this point to a better deal.

What to consider when choosing a longer term fixed rate mortgage

When you're looking at the range of 15 year fixed rate mortgages available, there are some factors you need to consider.

Beware of early repayment charges

Fixed deals typically come with early repayment charges attached.

This means that if you pay your mortgage early, either through repaying in full, overpaying over the permitted threshold, or remortgaging with another lender, you can risk paying a hefty fine.

This is important as, especially with a longer fix, it's more difficult to predict how your circumstances change. For example, during that time it's quite possible that you will need extra space to support a growing family, or as many people have realised as a result of the pandemic, preferences such as a home office or outside space can become essential.

With this in mind, it's important to consider the likelihood of you needing your property and for how long and weigh up whether a shorter fix would better suit your needs. With a shorter period of say, 2 years, it's easier to predict how your financial situation, lifestyle and needs will change.

You'll make higher monthly payments

With long term fixes, while rates remain low you'll make a larger monthly payment for the same mortgage amount in comparison to variable mortgages.

This is because you're locking into a rate that reflects what the market believes rates will be in 15 years' time, which of course could change over that period.

While you can benefit from a long term fix in terms of not having to worry about mortgage repayments changing, if this is for the full 15 years it could be more expensive than with shorter fixes that would allow you to reassess again when rates are expected to rise.

You won't benefit if interest rates fall

At the time of writing, rates are at record low levels and are unlikely to reduce much further.

However, suppose you choose to secure a 15 year fixed mortgage deal at a point in the future when mortgage rates are higher. In that case, it's possible that they will fall before your fixed deal ends, and you would miss out on the potential opportunities to benefit from lower rates this could provide.

What is the lender's standard variable rate?

A lender's standard variable rate is the interest rate you'll pay if you don't remortgage to another deal at the end of your fixed period.

While it's likely that rates will have increased by this point, so too could the Bank of England base rate, meaning that while rates are higher, they may not be much higher than before, which is why many people choose to switch deals when their fix ends.

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What can you do if your circumstances change?

If at any time during the 15 year period, you need to move homes or remortgage for another reason, it's possible that a mortgage lender will allow this and may not charge early repayment charges provided certain conditions are met.

It is important that you understand the terms of the mortgage products before you make your mortgage application. An experienced mortgage adviser - such as our team at Teito - can help you to determine the best choice for you and your current situation.

What will your monthly repayments be?

This is important as with most mortgage deals there are varying rates and fees that come into play, which can see monthly payments vary considerably between different lenders. So if possible, find out what rate each one offers, so you know for sure how much to expect when you make your decision.

What credit score do you need for a 15 year fixed mortgage?

As with any mortgage or home loan, your prospective lender will want reassurance that you are a reliable borrower and that they will receive back the loan amount with interest in full.

Different mortgage providers have different criteria, but to be offered the best interest rate on a long fix mortgage, it helps to have a healthy credit score.

If your credit record could do with some improvement, there are a few steps you can take to boost your score; pay credit repayments on time, use credit sensibly, and make sure you are registered on the electoral roll.

Check your record with the main credit agencies and get an understanding of what is driving your score - this can take some time so make sure to plan a few months ahead of making your mortgage application!

Get a great deal on a 15 year fixed mortgage

At Teito, our online comparison service features an extensive range of 15 year fixed rate mortgages to suit your needs. It's quick and easy to use, allowing you to find the best deal for your circumstances in one place.

Start comparing deals now and find your perfect mortgage in minutes!