Spotlight: Chelsea 10-year fixed-rate mortgage

With interest rates at an all time low, many of us are considering fixing our deal at a slightly higher than average rate today in order to avoid much higher rates in the future. In response, Chelsea Building Society has launched a 10-year fixed rate deal at 4.59 per cent, which then defaults to the standard variable rate (currently 5.79 per cent) for the rest of the mortgage.

Deciding whether you want to pay several per cent more than the best deals available today with the chance of reaping the benefits later is a compelling argument and the arrangement fee of £995 is reasonable. The maximum loan to value is 65 per cent.

The real issue with these long term fixes is that you have to be convinced your life won’t change a great deal in that time. It is one thing to know what you’ll be paying over the years, but the early repayment charges are significant. On this deal, charges start at 8 per cent a year and only drop by one percentage point every two years. If your circumstances change you could pay huge penalties.