Fixed-rate MortgageFinancial Dictionary -> Mortgages -> Fixed-rate Mortgage
There are two main types of fixed rate mortgage. The 15 year fixed rate mortgage and the 30 year fixed rate mortgage.
The main difference between the two, other than the length of the loan term is that the 15 year mortgage has lower interest rates because you are paying the lenders back in half the term of a 30 year mortgage. Obviously because of this the monthly payment is higher though, but this doesn't mean you are paying more.
Traditionally people look to take out a 30 year fixed rate mortgage when interest rates are low in order to fix in the low rate and keep it there even if rates go up. This can have the opposite effect if interest rates are high and at that point most people opt for the adjustable rate mortgage with a floating interest rate in hope that interest rates eventually decline.
Some lenders allow you to pay off the fixed rate mortgage early with an added fee, or they allow a considerable amount to be paid upfront before the loan term starts. Early repayment of the entire loan amount through refinancing is often undertaken when interest rates drop quickly and significantly.
Like most loans obtaining a mortgage, fixed rate or otherwise is dependent on your credit rating and history and any sign that you may be a risk or that you can't afford the loan may lead to rejection or terms that put you worse off than somebody else.