For the beginners it is very important to understand what the term fixed interest rate mortgage means. As the word ‘fixed’ suggests the rate of interest on the loan throughout the period for which it is taken will remain fixed. It does not matter if the repayment plan is for 30 years or for 5 years, the rate of interest on the fixed interest rate mortgage will not likely change until and unless the refinancing of mortgage takes place.
The fixed interest rate of mortgage will assure you complete security and less worries, this is the important advantage. With this the rate of interests during the entire repayment program will remain fixed; this uniformity from start to end will save you rigorous financial calculations and modifications. You can always go for fixed mortgage rates with your eyes closed if you are going for a short term mortgage loan. And also if you’re monthly commitment is less you can always go for fixed rates as it is a safer way of approach. One big real advantage of going for fixed rates is that even if the interest rates increase to a great extent you still have to pay only your fixed rate of interest. But when you go for a mortgage loan for around 3o years definitely fixed rates are helpful as rate of interest will always increase in a time period of 30 years which is very huge.
One real pain while you go for fixed interest rates is that you have to choose the best fixed rate that is available since you are going to repay with that interest for a very long term. If you are a person who likes to take some risk and make more money this type of interest is not the best one as it always remains the same for your life time. In case there is rise in the interest rates, you still do not feel the pinch but yes, if the rate of interest gradually declines then you will have to miss the saving opportunities as a result of the fixed interest rate mortgage. This is the major drawback of this plan.