Mortgages Explained

A mortgage is a loan that is secured on a property and is also known as a home loan. A mortgage is usually acquired from a lender to buy residential property. Mortgages are long-term secured loans usually repaid over a fixed period known as a mortgage term.

Fixed rate mortgage

The interest rate at the beginning is fixed for a set length of time, for example 3 years. After the 3 years is up, this fixed rate will change to the variable rate.

Advantage

The rate will be the same every month for the set length of time, regardless of other interest rates rising. It is possible to plan your finances for this fixed rate period, as you know what your outgoings are.

Disadvantage

If the interest rates fall within this set time, you will pay more than you would if you had chosen a more flexible type of mortgage.