A Look at Fixed Mortgages
But you might find a fixed rate mortgage that only guarantees your rate for a period of a year or so. This kind of offer may be made to bring in someone who never before would have qualified for a mortgage loan. The interest rate is usually quite low to start with but this “teaser rate” does not last long. When the fixed interest rate has run its course, the rate goes on to fluctuate in correspondence with the housing market. Unfortunately this is not always a good thing! The major drawback of a fixed mortgage is that when the property value falls due to market trends, it will not be profitable for you. If you have an adjustable rate mortgage, the current economic status of the housing market will highly influence rate figures.
The main advantage of a fixed mortgage is that you know exactly how much you are paying every single month. If you’re trying to stick to a budget, a fixed rate mortgage guarantees against your payments each month increasing precipitously. There are folks who’ve foolishly been talked into taking an adjustable rate mortgage, even though they know their budget can’t accommodate a rise in interest rate. The beauty of a fixed rate mortgage is that there’ll be no guesswork around your monthly payments.
Another thing that you may not have considered is that with a fixed mortgage if your income increases you don’t have to pay anything extra. So you will still have a fixed rate mortgage with extra money to spend on whatever you like. However, if you plan to repay the mortgage early then you will usually find that there can sometimes be high fees included.
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