There are some fixed mortgages that only offer a fixed rate for up to 12 months. This kind of offer may be made to bring in someone who never before would have qualified for a mortgage loan. The interest rate is usually quite low to start with but this “teaser rate” does not last long. When the fixed interest rate has run its course, the rate goes on to fluctuate in correspondence with the housing market. Unfortunately this is not always a good thing! The major drawback of a fixed mortgage is that when the property value falls due to market trends, it will not be profitable for you. Those with an adjustable rate mortgage will pay eitherhigher and lower rates depending upon the housing market.
The best part of a fixed mortgage is that your monthly installment is decided in advance. This is great for anyone trying to adhere to a budget, or anyone else where a rise in your monthly mortgage payments would cause problems. There are folks who’ve foolishly been talked into taking an adjustable rate mortgage, even though they know their budget can’t accommodate a rise in interest rate. At least with a fixed mortgage you know exactly how much you need to pay every single month.
You may have not considered that if you have a fixed mortgage, you don’t have to pay anything extra even if your income increases. This means that you’ll still have a fixed rate mortgage with money left over to spend on whatever you want. Should you opt to pay down your mortgage early, however, you might find yourself subject to unexpected high fees.