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Articles » Finance » Mortgage >> View Article
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| Interest And The Fixed Rate Mortgage |
By:
Carol Bell |
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The monthly repayments for long term fixed rate mortgages are the main thought for many couples looking to purchase a home. A large number of couples these days have decided to wait and are buying homes later but they also wish to pay off their mortgage earlier. But, before you commit yourself and sign any documents, there are a number of issues you should consider.
One fundamental point is to ensure that the rate of interest doesn't alter during the life of the loan. Of course, many lenders seem to offer deals that are too good to be true. Loans arranged for a long term fixed rate mortgage keep the same rate of interest throughout the entire life of the loan agreement. If you are someone that wants a loan with a set fixed monthly mortgage payment with no hidden extra charges then this is the main benefit with this type of arrangement. When we were looking to purchase a home, my wife and I decided to go for a loan with a fixed rate mortgage. Our aim was to pay of the mortgage as soon as we could without getting into financial trouble because of high monthly installments.
It became obvious that we had to look at fixed rate mortgages over a extended period and not just fifteen year fixed mortgage rate plans. The problem was that we weren't very happy about having a mortgage still running close to when we both retired and hoped that a 15 year fixed mortgage rate would still be available to us. There was obviously very good reasons to finish paying the loan off earlier if at all possible.
{There were many things that factored into this; first of all, I discovered that my wife was having a baby. My wife's contribution to the monthly finances would probably be unreliable since she preferred to raise our child at home. Alas, a higher monthly payment is the downside of loans on a fifteen year fixed mortgage rate plan. It was a case that we simply didn't wish to get in too deep and cause troubles in the future.
After looking at the much lower amount we would be making on our regular payments with a 30 year fixed rate mortgage, there wasn't any option but to go with it. Also, where possible, making a few additional lump sum repayments during the year helps bring down the sum owed. Just by making a handful of supplemental payments throughout a twelve month period you can knock years off of your mortgage period. Although this takes some discipline, it is well worth it in the long run. Under other conditions, we would have preferred to have taken out a loan with a fifteen year fixed mortgage rate but we had to consider our other commitments as well. Despite all our worries, things turned out ok for us in the long run and we don't regret our decision. |
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