Information on the Cheapest Fixed Rate Mortgages

By Zindy Maseko in Mortgages on May 10th, 2008

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by Zindy Maseko

There is always a debate when home buyers have to decide on the merits of 15 or 30 year fixed mortgage rates. Of course the goal for most people with a mortgage is to pay it off early and save themselves a great deal of money in interest repayments. There are always things to take into account before signing documents. One important point is to ensure that the interest rate doesn’t change during the life of the loan.

It seems that some lenders are happy to offer deals that appear too good to be true and they usually are. A 15 year fixed rate mortgage means the interest rate remains stable for the life of the loan. If you are someone that wants a loan with a regular fixed repayment and no additional charges then this is the main benefit with this type of agreement. Both my wife and I decided to research fixed rate mortgages when we started looking at homes for sale.

Even though it was important for us to pay off our loan at the earliest possible opportunity, we didn’t want high, unrealistic monthly payments which we would have trouble maintaining. Considering longer term fixed rate mortgages was one option if we could not afford a 15 year plan. Still, having a mortgage close to retirement wasn’t what we were looking for, so we decided to try for a loan with a 15 year fixed mortgage. We felt that there was a great deal of emphasis on paying the mortgage off early.

Taking everything into account we finally went for the easier 30 year mortgage plan instead. There were many things that factored into this decision. Discovering my wife was having a baby was the most important reason. My wife was going to raise our child from home so her addition to the monthly income would be restricted. The problem we could see was the increased financial commitment on a monthly basis if we had opted for the 15 year fixed mortgage rate. We just decided we would probably get into trouble if we took this route. The monthly payments on a 30 year loan were quite a bit lower.

Making a few additional lump sum payments during the year helps bring down the amount owed. It is possible to take years off your loan if you can make a few extra payments during each year. Although this isn’t easy to achieve, in the long term it is well worth it.

Our first choice would have been to go for the short term 15 year fixed rate mortgage solution but this did not help with our more immediate situation. In retrospect, everything worked out ok for us by going down this road.

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