Fixed-Rate Mortgage

Definition

Fixed-rate mortgage is the type of mortgage loan in which the interest rate remains the same or fixed over the term of the mortgage. Since the interest rate remains the same, the monthly payments remain the same for the entire mortgage term. It is one of the most popular types of mortgages, especially among the Canadians. However, it is usually more expensive or has a higher starting interest than other mortgages such as variable rate mortgage in which the interest rate may change.

Conventional Fixed-rate mortgages provide borrowers with an established interest rate over a set term of typically 15, 20, or 30 years. Nevertheless, fixed-rate mortgage terms from 6 months to 10 years are also available.  In a fixed- rate mortgage, the shorter the term over which the borrower pays, the higher the monthly payment and vice versa.

Explore Definition

Kept Simple

Let’s say an individual takes a fixed-rate mortgage loan to buy a house at YZ% of interest. He is required to pay the loan in 5 years. With  fixed-rate mortgage loan, within that 5 years, the rate of interest – YZ% remains the same.

How Does Apply to you

Suppose you opt to a Fixed Rate Mortgage, to buy a house, for a 8-year term at 5%, the interest rate will remain at 5%, regardless of whether the market interest rates rise or fall.

Share this to help everyone get a better understanding of finance

Facebook
Twitter
LinkedIn
WhatsApp

Be the first to try the app

Sign-up and get exclusive access to try the app when we launch. It’s time to control your finance.

About us

Control all aspects of your finances. Learn about what you need to know to make smart decisions. But most of all, have trust that we’re here to help. In the end, you’ll have more time to do what you love.
Chango - Unifying your financial world. | © 2018 Chango Card Inc.