What is a Fixed Interest Rate Mortgage?
A fixed interest rate mortgage offers an interest rate that is “locked-in”. Locked-in is a term that means the rate remains the same for the term of the loan. You won’t have to think about fluctuations in the interest rate during the duration of your mortgage term. You’ll know exactly what to expect in your interest rate, mortgage payment amount, the portion of your payment that goes toward principal and interest, and how long it will take you to pay off your mortgage.
The disadvantage of a fixed interest rate is that it is usually more expensive than a variable interest rate mortgage. As well, borrowers may end up paying more than others who are locked in at a lower rate. Though, borrowers can consider adjusting their fixed mortgage rate by refinancing their home, which can potentially be costly but worth it.
A fixed interest rate mortgage is a simple method of financing a home. If you’re not in a position to take financial risks, this type of mortgage might be ideal for you.