Fixed rate mortgages guarantee a specific rate of interest for a set length of time. Most commonly, this is for between one and five years, though it can be as long as ten or even fifteen years. As a rule, the longer the fixed period, the higher the starting rate of interest. A lender will not want to commit to lending you money at a really low interest rate for ten years when there is a fair chance that during that period the general level of interest rates may rise above the rate at which they are lending you money. The lowest interest rates are often found with deals that are fixed for two to three years.
A mortgage that maintains the same annual percentage rate throughout the full term. Generally the premier option for consumers looking for protection from inflation.
A mortgage in which the interest rate is fixed for an initial temporary period.
The interest rate on this agreement stays the same for as long as you hold your mortgage, no matter how interest rates change in the financial markets. With this type of mortgage, you know exactly how much you will pay in principal and interest on your home each month. (Remember, taxes and insurance on your home may change from year to year.)
Here interest and monthly payment are fixed for the full term of the loan, typically 30 or 15 or 10 years, though other terms are available. The advantage of a fixed-rate loan is that the borrower always know what the cost is for the life of the loan. Fixed-rate mortgages are most attractive when interest rates are low. When interest rates rise, it become more difficult to qualify for a fixed-rate loan because monthly payments are high. The lower the interest rate, the more expensive a home you can afford.
Flexible Mortgage Flying Freehold
The interest rate is fixed for a specified term. If the mortgage is paid prior to maturity of the term, a penalty applies. Some mortgages do not allow for early payout in the first three years except for when there is a bona fide sale. The penalty is usually the greater of three monthsâ€™ interest or the interest rate differential.
A mortgage in which the interest rate is set for the term of the loan.
A type of mortgage loan usually with 30 or 15 year loan terms where the interest rate remains constant throughout the life of the loan (anything from 6 months through to 7 years). The advantages of a fixed rate loan is your own security that the interest rate will not increase. The disadvantage of a fixed rate loan occurs when interest rates substantially decline below the interest rate of your loan. If the mortgage is discharged before the end of the fixed rate term, there is usually an Early Repayment Penalty incurred.
A mortgage in which the interest rate does not change during the entire term of the loan.
Mortgages with a fixed interest rate. You payment for principal and interest will not change for the life of the loan. Your monthly payment may change if taxes or insurance rates change.
A fixed rate mortgage is where the rate of interest and payment amount are fixed for a specific term.
Loans whose interest rate remains constant for the life of the loan. Since the interest rate is constant and the term is known, the principal and interest portion of the payment will not vary.
Characteristics of a fixed rate mortgage: A rate that does not change during the life of the loan. A consistent payment. Less risk because of payment stability.