When you buy a new property through a loan, you are offered the choice of fixed mortgage rates on flexible mortgage rates. It is important that you analyze these one options clearly before taking a call.
Fixed Mortgage Rates
In a fixed mortgage, the rate of interest that you pay on the loan would be fixed throughout the term of the loan. This means the amount of payment made will be same & there will be no hassles.
This would be an ideal mortgage plan to pick in case you will be holding on to the property for sometime.
Advantages of Fixed Mortgage Rates
The main advantage of fixed mortgage is that your rate of interest would be the exact same whether the economy goes up or comes down. You can do cautious budgeting & have absolute peace of mind. Your payments will stay constant & won't increase with the market trends.
Disadvantages of Fixed Mortgage Rates
There's definite vital disadvantages in this type of mortgage that you ought to know:-
* Like the name suggests, this mortgage is fixed & has absolutely no flexibility.
* When rates of interest fall, you are still stuck with higher rates of interest. You cannot even refinance as you need to pay penalty for the same.
* The rate that you pay will normally be a tiny higher than the adjustable rate mortgages.
Flexible Mortgage Rates
A flexible mortgage rate is normally lesser than a fixed mortgage rate. However, is the economy goes through ups & downs; the rate of interest also keeps changing to accommodate that. Mostly, there is a predetermined range within which the movement occurs. That is, there is a fixed lowest rate of interest & a highest rate of interest that is determined beforehand.
Advantages of Flexible Mortgage Rates
The major benefit of a flexible mortgage is that you are paying lower rates in the beginning & your rate may even fall further depending on the market condition. Thus, in case you are not planning to hold on to your property for long, then a flexible mortgage will be highly advantageous.
Disadvantages of Flexible Mortgage Rates
One major disadvantage with this type of mortgage plan is that it is highly unpredictable & you can not be readily prepared for it beforehand. In a rising market, a flexible mortgage can entail heavy payments & can show to be disadvantageous to you.
What to Pick?
Whether to pick a fined or a flexible mortgage rate depends by yourself individual circumstance. In case you plan to hold on to the asset for a long time & the market is rising, then a fixed mortgage rate could be a nice option.
However, in most other situations, a flexible mortgage rate can show to be more advantageous to you. So, do your ground-work carefully before taking the final decision.
By: Rashid
Fixed Mortgage Rates
In a fixed mortgage, the rate of interest that you pay on the loan would be fixed throughout the term of the loan. This means the amount of payment made will be same & there will be no hassles.
This would be an ideal mortgage plan to pick in case you will be holding on to the property for sometime.
Advantages of Fixed Mortgage Rates
The main advantage of fixed mortgage is that your rate of interest would be the exact same whether the economy goes up or comes down. You can do cautious budgeting & have absolute peace of mind. Your payments will stay constant & won't increase with the market trends.
Disadvantages of Fixed Mortgage Rates
There's definite vital disadvantages in this type of mortgage that you ought to know:-
* Like the name suggests, this mortgage is fixed & has absolutely no flexibility.
* When rates of interest fall, you are still stuck with higher rates of interest. You cannot even refinance as you need to pay penalty for the same.
* The rate that you pay will normally be a tiny higher than the adjustable rate mortgages.
Flexible Mortgage Rates
A flexible mortgage rate is normally lesser than a fixed mortgage rate. However, is the economy goes through ups & downs; the rate of interest also keeps changing to accommodate that. Mostly, there is a predetermined range within which the movement occurs. That is, there is a fixed lowest rate of interest & a highest rate of interest that is determined beforehand.
Advantages of Flexible Mortgage Rates
The major benefit of a flexible mortgage is that you are paying lower rates in the beginning & your rate may even fall further depending on the market condition. Thus, in case you are not planning to hold on to your property for long, then a flexible mortgage will be highly advantageous.
Disadvantages of Flexible Mortgage Rates
One major disadvantage with this type of mortgage plan is that it is highly unpredictable & you can not be readily prepared for it beforehand. In a rising market, a flexible mortgage can entail heavy payments & can show to be disadvantageous to you.
What to Pick?
Whether to pick a fined or a flexible mortgage rate depends by yourself individual circumstance. In case you plan to hold on to the asset for a long time & the market is rising, then a fixed mortgage rate could be a nice option.
However, in most other situations, a flexible mortgage rate can show to be more advantageous to you. So, do your ground-work carefully before taking the final decision.
By: Rashid
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