Why A Fixed Rate Mortgage Is The Best Way To Guarantee Your Monthly Budget
What is a fixed rate mortgage?
A fixed rate mortgage is a loan agreement that enables you to secure the same interest rate for the entire length of your loan. Fixed rate mortgages are available for mortgages taken over 10, 20 or 30 years. Whether you are making your monthly payment in 2016 or 2028, you will be paying the same amount regardless of what happens with interest rates in the future.
What is the advantage of a fixed rate mortgage?
By fixing your interest rate for the duration of your mortgage, your monthly payments will be made stable. You are 100% protected from interest rate rises.
What is the disadvantage of a fixed rate mortgage?
In the first few years your monthly payments may be higher than they would be if you had an adjustable-rate mortgage.
Who are fixed rate mortgages best suited to?
There is no doubt fixed rate mortgages are best suited to those who do not plan to moving anytime soon. If you are likely to have to move for work or because you’ll need a bigger house in a few years, then do not take out a fixed rate mortgage.
Can I refinance my existing mortgage and take out a fixed rate mortgage?
Fixed rate mortgages are available to people refinancing an existing mortgage, and the length of mortgage available for this is typically 15 to 20 years.
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About the Author
Emily Williamson
Emily Williamson is a personal finance expert dedicated to helping readers find genuine savings and smart shopping strategies. With years of experience in consumer finance, Emily combines practical advice with trusted insights to guide you toward smarter financial decisions.