Fixed rate mortgages, also known as closed mortgages allow you to lock in a guaranteed interest rate for the entire mortgage term. Terms generally range from a minimum term of 6 months to a maximum term of 10 years. Most people choose terms from three to five years to provide medium term mortgage interest rate stability without paying the extra interest premium associated with very long terms.
Although the payment terms of closed mortgages is fixed, most mortgage lenders allow you to make periodic extra payments on your mortgage. Usually, there are limitations on how many extra payments you can make and the percentage of the original mortgage you are allowed to pay down without incurring charges or penalties. If you have extra cash, for example, from investment gains or tax refunds, you should consider applying this to your mortgage to reduce the interest you will pay.
|
|
|
