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A Look at the Advantages and Disadvantages of Fixed Rate Mortgages from Mortgage Lenders in Mississauga

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If you live in Mississauga and are working towards buying your first home, you will likely need a loan to finance your purchase. Residential mortgages offer potential homeowners a means of being one step closer to owning their own home. Mortgage lenders in Mississauga offer money for residential mortgages at specific rates of interest for a mortgage loan on the property. As a borrower, you agree to repayments on the loan, plus the agreed upon interest rate, over the term of the loan.
People living in Mississauga have traditionally turned to banks for their mortgaging needs. However, this has changed in recent years. An increasing number of homebuyers are seeking the help of mortgage brokers who work with a variety of mortgage lenders in Mississauga, including major banks and mortgaging institutions, as well as through private funds.
Getting a mortgage for your first home is a big financial commitment with an overwhelming number of options. One of the main questions you have to answer is what type of mortgage rate to choose. A fixed mortgage rate is one that does not change over the course of the home loan. Unlike a variable mortgage rate, a fixed rate will not increase or decrease during the lifetime of the loan. The fixed rate is based on Government of Canada bond yields plus any additional expenses mortgage lenders in Mississauga incur. As with any other financial decision, there are pros and cons to choosing fixed rate mortgages.

Benefits of Choosing a Fixed Rate Mortgage

Fixed rate mortgages are much easier to understand for the first time homebuyer. With a fixed rate mortgage, a homeowner can accurately calculate the monthly payments on the loan. Fixed rate mortgages guarantee payment stability and protect the homeowner against interest rate increases that can accompany variable rate mortgages. If you like consistency and stability, a fixed rate mortgage is probably the right choice for you.

Disadvantages of Choosing a Fixed Rate Mortgage

Choosing a fixed rate mortgage may not always be the best choice for all homeowners. Although you are guaranteed payment stability and protection against interest rate increases, opting for a fixed rate also means you will not have the opportunity to pay less if interest rates decrease. There is the potential that you could miss out on saving money if interest rates go lower than the fixed rate you are paying. In order to benefit from lower interest rates, you would have to refinance your loan, which comes with penalties and other costs. Also, fixed mortgages may lack the individual customization that mortgage lenders in Mississauga offer. Most fixed rate loans tend to be almost identical from lender to lender, making it difficult to find a loan that is customized to your unique situation.
Homeowners who have a set limit on the total mortgage payment they can afford will benefit the most from a fixed rate mortgage. Mortgage lenders in Mississauga can help you determine the maximum amount you can pay per month for a mortgage. With a fixed rate mortgage, the payment will not change over the term of the loan.




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