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Fixed Rate
Mortgage Loans: Pros and Cons |
Mortgage loans that offer fixed interest rates (commonly known as
Islamic Housing Loan) are the most common type
of fixed rate housing loan for new home buyers recently. Since the interest rates are
fixed, long
term homeowners can budget their finances accordingly because they will
be safeguarded against rising interest rates. Along with fixed rates
that are determined by the market, this type of loan involves little
risk and offers long term fixed monthly payments that are protected from
the effects of inflation.
Though appealing
to most, fixed rate mortgage loans aren?t for everyone. Other types of
mortgage loans allow you to borrow more than you could with a fixed rate
mortgage. If your plan to stay or invest in the property that you are borrowing against is
short in tenure, then you would probably end up paying more in interest
than you would if you chose a variable rate mortgage loan (commonly
known as Conversional Housing Loan).
Finally, with fixed interest rates, you are committed to that rate for
the duration of your mortgage tenure, even if the market interest rate drops in
future.
Keep in mind that the first offer you receive is not always the best.
Take your time, explore all options from many different lenders, and
decide which policy best suits your needs. It is always okay to say
?NO?. |
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