What is a fixed-rate mortgage?
A fixed-rate mortgage offers home owners predictable payments. How does it compare to a variable rate? Learn how fixed-rate mortgages work in the MoneySense Glossary.
A fixed-rate mortgage offers home owners predictable payments. How does it compare to a variable rate? Learn how fixed-rate mortgages work in the MoneySense Glossary.
A fixed-rate mortgage has the same interest rate throughout the mortgage term. (The other option is a variable-rate mortgage, whose interest rate fluctuates with the lender’s prime rate.) The mortgage term is typically five years.
Fixed-rate mortgages are often a good choice for home owners who want predictable future payments, or who expect interest rates to rise over the term of the mortgage.
Example: “Iqbal heard that interest rates were expected to rise, so he chose a fixed-rate mortgage to lock in at the current interest rate.”
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