Fixed Rate Mortgages

This type of mortgage is the most common, and has been around the longest. It is very likely that your parents had one and so did their parents too. The major advantage of having a fixed rate mortgage is that there are predictable housing costs for the life of the loan.  Essentially, you are reassured that there are not going to be any major rises and falls in your payments and so you can plan your finances for the next 30 years. Please not that some banks do attach a fixed mortgage to the Consumer Price Index (CPI) and therefore if there’s a major change in the value of the dollar (inflation or deflation) it can affect your monthly mortgage payments.
There are three main variants of fixed rate mortgage options on the market:

Please note that all banks offer different plans and schemes and so other variations may available based on a different timeline and payback schedule. Traditionally the 30 year mortgages are the favorite; however nowadays due to unpredictable financial times a larger range of options have become available for the new homeowner. Needless to say that for you and your financial situation this might be the best option for you. Usually it offers the lowest, never-changing monthly payment schedule. One can even get longer term loans, but you have to remember that the longer the term of the loan is the more interest you will have to pay in the long run.

Do you want to own your home in half the time and for less than half of the total interest costs that the traditional 30 year loan offers? Then the answer lies in 15 year fixed rate mortgages. With these loans the term is shortened by charging 10-15% higher monthly payments. Many people opt for this option so that they can own their homes before retirement or before children go to college, which both require money.

By paying half the monthly fee every two weeks with the biweekly mortgage scheme shortens the loan term to 18, 19 weeks. By doing this the annual amount paid increases by 8% and essentially you would be making 26 biweekly payments (13 monthly payments). The shortened term for the loan decreases the total interest costs considerably.

The main aim when choosing the payment plan of your new home is how much time and interest you want to take in paying it back. So think wisely and make the correct decision that is best for your financial situation.