The most desired mortgage these days is a Fixed Rate Mortgage, Lets weigh up the pros and cons.
Fixed Rate Mortgage pros:
- You know what your payments will be month to month with a fixed rate mortgage.
- Fixed monthly interest payments for the life of the mortgage.
- Fixed rate mortgages also provide protection from interest rates rises
Depending on your financial goals, you can schedule to pay off your home loan or fixed rate mortgage between 10 and 30 years.
Fixed Rate Mortgage cons:
With a Fixed Rate Mortgage if your timing is bad you may end up paying a higher rate of interest even when interest rates are low for the remainder of the mortgage period.
Your monthly repayments will not decrease.
At the end of the term borrowers can usually change the “fixed rate mortgage” to a standard variable rate mortgage.
Fixed-Rate Mortgage “Ask yourself these questions”:
- Do you prefer regular payments
- Live by a strict budget or are on limited or fixed incomes
- Plan to stay your home a long time
Top Tip
Try to get a fixed rate mortgage or remortgage when interest rates are low.