Beat Mortgage

How To Work Fix Rate Mortgage

July 1st, 2008

The monthly payments for 30 year or 15 year fixed mortgages are the main considerations for many people who are looking to buy a home. Most people that buy a home later in life want to have the mortgage paid off as soon as possible. Of course, there are many things to consider before agreeing to anything. A homeowner should pursue, wherever possible, a mortgage with a guaranteed interest rate.

It is not uncommon to see lenders offering deals that are too good to be true. For loans that have 15 year fixed mortgage rates, the same amount of interest is maintained throughout the life of the loan. The greatest benefit with this type of agreement is that there are no sudden unexpected amounts to pay. When we were looking to buy a home, my wife and I decided to go for a loan with a 15 year fixed mortgage rate.

It was always our intention to clear our mortgage debt as early as we could but we didn’t want to over extend ourselves at the same time. It became obvious that we had to look at fixed rate mortgages over a longer period and not just 15 year plans. We didn’t really like the prospect of having a mortgage as we approached retirement so were really hoping to get one of the loans with 15 year fixed mortgage rates. Too much pressure was placed on the early repayment of the mortgage loan.

After taking everything into consideration we decided on a 30 year loan instead. There were many things that lead us into making this choice. Discovering my wife was having a baby was the most important reason. My wife decided she wanted to raise our child at home so I couldn’t be certain of her monthly financial commitment to our household expenses. Our monthly payment would have been too high if we had committed ourselves to the 15 year fixed mortgage plan. For us it just wasn’t feasible as we would just be in over our heads. Despite the trepidation of having a longer term loan, it did reduce the repayments considerably.

We found that if we could make a few extra payments throughout each year then it would gradually reduce the principle sum owed. By doing this you can also reduce the term of the mortgage by quite a few years. Although this isn’t easy to achieve, in the long term it is well worth it. We would have much preferred to have taken out a loan with a 15 year fixed mortgage rate but we had to consider our other commitments as well. Things worked out well anyway, even though we were unsure about it to start with.

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